Sue Shee, Inc. has ending inventory of $386,500, and cost of goods sold for the year just ended was $2,532,095. What is the inventory turnover for the company?
A) 4.36
B) 3.13
C) 6.55
D) 1.20
Inventory Turnover Ratio helps in understanding the no.of times the inventory is being rotated to make up to the required supply of goods for the annual sales; Otherwise, the no.of times the company has sold out the inventory and replaced the same.
Formula: Cost of Goods Sold / Average Inventory
Since average inventory is not given in the problem above, have assumed closing inventory as average inventory.
Answer (C) : 6.55 times
Inventory Turnover Ratio: | |
Cost of Goods Sold | 25,32,095 |
Inventory | 3,86,500 |
Inventory Turnover Ratio | 6.55 |
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