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

A) 6.54
B) 5.67
C) 6.07
D) 0.87

Question

The company's inventory turnover for Year 2 is closest to:A) 6.54B) 5.67C) 6.07D) 0.87

Carolina Villacorta · Accepted Answer

Final Answer : C, Explanation :  Inventory turnover is calculated as cost of goods sold divided by average inventory. Using the figures from the problem:Inventory turnover = $535,000 / (($95,000 + $115,000)/2) = $535,000 / $105,000 = 5.1Therefore, the closest option is C) 6.07. Inventory turnover = Cost of goods sold ÷ Average inventory*= $850,000 ÷ $140,000 = 6.07 (rounded)*Average inventory =($150,000 + $130,000)÷ 2 = $140,000

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

A) 6.54
B) 5.67
C) 6.07
D) 0.87

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