Question

The financial statement of Willamette Valley Vineyards reported Net revenues of $13,271,914 and Cost of goods sold of $5,588,439. Note 3 reported that Inventories consisted of: Year 2 Year 1 Winemaking and packaging materials $ 732,909 $ 454,612 Work-in-process 4,099,224 3,891,754 Finished goods 5,001,179 4,880,518 Total inventories $9,833,312 $9,226,884 The inventory turnover for year 2 was:

Answer 1

0.59 times

Step-by-step explanation:

The computation of the inventory turnover ratio is as followS:

As we know that

Inventory turnover = Cost of goods sold ÷ Average inventories

where,

Average inventory is

= ($9,833,312 + $9,226,884) ÷ 2

= $9,530,098

And, the cost of goods sold is $5,588,439

So, the inventory turnover is

= $5,588,439 ÷ $9,530,098

= 0.59 times