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Which ratio is used to measure the comparative efficiency of a company in turning over its goods after deducting cost of sales?

User Usman Riaz
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Final answer:

The inventory turnover ratio is used to measure the efficiency of a company in turning over its goods after deducting the cost of sales.

Step-by-step explanation:

The ratio used to measure the comparative efficiency of a company in turning over its goods after deducting cost of sales is known as the inventory turnover ratio. This ratio shows how efficiently a company can control its stock by turning it over in a given period, which is typically a year. The formula to calculate this ratio is the cost of goods sold (COGS) divided by the average inventory during the period. A higher ratio indicates more efficiency as it shows that the company has sold and replaced its inventory more frequently.

User Arghol
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