The company's inventory turnover for Year 2 is closest to:

A) 5.17
B) 5.56
C) 6.00
D) 0.86

Question

The company's inventory turnover for Year 2 is closest to:A) 5.17B) 5.56C) 6.00D) 0.86

Amauri Minger · Accepted Answer

Final Answer : B, Explanation :  Inventory turnover = Cost of goods sold / Average InventoryAverage Inventory = (Beginning Inventory + Ending Inventory) / 2Average Inventory for Year 2 = (180,000 + 240,000) / 2 = 210,000Inventory turnover for Year 2 = 1,170,000 / 210,000 = 5.57 (rounded to two decimal places)The closest answer choice to 5.57 is B)5.56. Inventory turnover = Cost of goods sold ÷ Average inventory*= $900,000 ÷ $162,000 = 5.56 (rounded)*Average inventory =($174,000 + $150,000)÷ 2 = $162,000

The company's inventory turnover for Year 2 is closest to:

A) 5.17
B) 5.56
C) 6.00
D) 0.86

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