Question

Spree Company sold $769,300 of goods during the year at a cost of goods sold of $548,600. Inventory was $31,283 at the beginning of the year and $35,538 at the end of the year. What was the inventory turnover ratio for the year?

Answer 1

16.42

Step-by-step explanation:

Data provided in the question:

Cost of goods sold = $548,600

Beginning inventory of the year = $31,283

Ending inventory of the year = $35,538

Now,

the Inventory turnover ratio is calculated as;

⇒ ( Cost of goods sold ) ÷ ( Average inventory of the year )

Also,

Average inventory of the year =
`\frac{\textup{Beginning inventory + Ending inventory}}{\textup{2}}`

=
`\frac{\$31,283+\$35,538}{\textup{2}}`

= $33,410.5

Therefore,

Inventory turnover ratio = $548,600 ÷ $33,410.5

= 16.42