Question

Smith & Sons has beginning inventory of $400,000, ending inventory of $300,000, cost of goods sold...

Smith & Sons has beginning inventory of $400,000, ending inventory of

$300,000, cost of goods sold of $1,500,000, and sales revenue of $2,400,000.

What is the company’s inventory turnover?

Select one:

8.0

6.0

5.0

4.3

6.9

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Homework Answers

Answer #1

Solution-

The company's inventory turnover is 4.3.

Reason-

Inventory Turnover = Cost of Goods Sold / Average Inventory

Average Inventory = Beginning Inventory + Closing Inventory / 2

                              = 400000 + 300000 / 2

                              = 350000

Inventory Turnover = 1500000 / 350000

                               = 4.3

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