Question

With beginning inventory at cost of $9,000, ending inventory at cost of $7,000, net sales of $51,000, and cost of goods sold of $46,000, the inventory turnover at cost to the nearest hundredth is

Answer 1

Answer: Inventory turnover ration is 5.75

Explanation:

Initial inventory is 9,000 and ending inventory is 7,000 so the average inventory is 8,000. You then divide this into your cost of goods sold (COGS) and get 5.75 as your answer.

Answer 2

The inventory turnover at cost is 5.75.

Explanation:

Since,

`\text{Inventory turnover ratio}=\frac{\text{Cost of good sold}}{\text{Average inventories}}`

Given,

Beginning inventory = $ 9,000

Ending inventory = $ 7,000

Thus,

`\text{The average inventories}= (9000+7000)/(2)=(16000)/(2)=8000`

Also, the cost of goods sold = $ 46,000,

Hence,

`\text{Inventory turnover ratio}=(46000)/(8000)=5.75`