Regarding inventory turnover as an operations efficiency measure, which of the following is the most appropriate answer?

a) purpose is to measure liquididty

b) measures efficiency in turning inventory into sales

Answer: Neither (A) nor (B)

Explanation:

Inventory turnover is referred to as an vital measure in assessing efficiency of an organization's operations and management of inventory. The inventory turnover examines how frequently an organization moves inventory within a given period. The faster an organization is able to rotate inventory, the more efficient management of inventory it has. The fast rotation of inventory states that an organization is doing well at forecasting the amount it needs to produce, and thus can sell the what it creates.