Based on the following data for the current year, what is the inventory turnover?

Sales on account during year $700,000

Cost of goods sold during year 270,000

Accounts receivable, beginning of year 45,000

Accounts receivable, end of year 35,000

Inventory, beginning of year 90,000

a) 9.7 b) 3.0 c) 2.5 d) 2.7

Question

Julius Reynolds

Business

5 October, 00:55

Based on the following data for the current year, what is the inventory turnover?

Sales on account during year $700,000

Cost of goods sold during year 270,000

Accounts receivable, beginning of year 45,000

Accounts receivable, end of year 35,000

Inventory, beginning of year 90,000

a) 9.7 b) 3.0 c) 2.5 d) 2.7

+1

Answers (1)

Know the Answer?

Katelynn Mcgee · Answer 1

The answer is D.

Explanation:

Inventory turnover is a measure of the number of times inventory is being sold or used during a given period of time.

A high inventory turnover means a company is selling goods very quickly and that demand for their product exists. Low inventory turnover means weaker sales and ing demand for a company's products.

Inventory turnover = Cost of goods sold/Average inventory

Average inventory is:

($110,000 + $90,000) / 2

=$100,000

Therefore, inventory turnover ratio:

$270,00//$100,000

2.7