Question

which of the following is equal to costs of goods sold (cogs) divided by average inventory?
profit margin
inventory turnover
days of inventory

Explanation:

• Profit margin is calculated as (Net Income / Revenue), not related to COGS and inventory.
• Inventory turnover is defined as $\frac{\text{Cost of Goods Sold (COGS)}}{\text{Average Inventory}}$, matching the given formula.
• Days of inventory is calculated as $\frac{365}{\text{Inventory Turnover}}$, which is not the ratio of COGS to average inventory.

Answer:

B. inventory turnover