Question

Sue Shee, Inc. has ending inventory of $386,500, and cost of goods sold for the year...

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

Homework Answers

Answer #1

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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