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For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000?

 At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000.

The inventory turnover ratio for the year was :

a)4.8

b)5.0

c)4.5

Accounting Inventory Accuracy Inventory Management
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Question added by Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants
Date Posted: 2015/07/09
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b)5.0 is the answer. Inventory turnover ratio = cost of goods sold / Average Inventory. Average inventory is $105,000 thus ($100,000 + $110,000)/2. Inventory turnover ratio will be $525,000/$105,000 =5.0

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