Which equation is correct to calculate the inventory turn over 1- Inventory turnover = (annual cost of goods sold) / (ending inventory) or 2- inventory turn over = cost of goods sold / beginning inventory balance + ending inventory balance / 2 ?

Dear All,

The correct answer is ;

1- If you have one figure of Ending inventory ( as you got the Balance Sheet of the for example, and you did not get any other figures for inventory, You may use only this number, ( ending balance for the Balance Sheet of Inventory) , to be :

         Cost of Goods Sold/ Ending Balance.

2- However, if you have the beginning balance also i.e. You have another figure for year (as Beginning  of = End of) . So you have two figure, So you SHOULD get the average of the two figures, and.. So the Formula is : 

           Cost of Goods Sold/ Average Inventory .

This is Final , and Thank You .

2. Inventory Turn Over= Annual cost of goods sold /Average Inventory(Beginning inventory + Ending inventory)

The correct answer is 2  

(Inventory Turnover = Cost of Goods Sold/Average Inventory)

2- inventory turn over = cost of goods sold / beginning inventory balance + ending inventory balance + Transfers in the new fiscal year has not yet received 

Inventory Turn Over= Annual cost of goods sold /ending inventory

RIGHT  ANSWER ADD BY EXPERTS <<<<<<<<<<<<<<<<<<<<<

The correct answer is no 2

Inventory turn over = cost of goods sold / beginning inventory balance + ending inventory balance

Answer is 2 

Cost of goods sold = Beginning Inventories + Cost of Goods Manufactured – Ending Inventories

Cost of goods sold figure is reported on the income statement.