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BBB Ltd has provided information from its financial statements for the year ended 30 June 2015....

BBB Ltd has provided information from its financial statements for the year ended 30 June 2015. Sales (all on credit) $1,900,000 Gross profit 900,000 Net income 150,000 Cost of sales1,000,000 Average inventory is $200,000 Accounts receivable at end of year 500,000 The company trades 365 days per year. The inventory turnover ratio is: Select one: a. 5.0 times. b. 5.5 times. c. 2.2 times. d. 2.0 times.

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Answer #1

The correct Option is A.

Inventory Turnover                       

       Cost of Goods Sold/ Average Inventory                         

         = 1,000,000/200,000                              

                =5 times

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