Question

At the start of the year, Sandy's Flowers had inventory worth $587,200 at retail. On December...

At the start of the year, Sandy's Flowers had inventory worth $587,200 at retail. On December 31, the retail value of the inventory was $137,700. If annual sales amounted to $2,899,600 find the inventory turnover at retail for the year. (Round your answer to the nearest tenth)

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Answer #1

Inventory Turnover for the year

Inventory Turnover Ratio is calculated by using the following formula

Inventory Turnover Ratio = Annual Sales / Average Inventory

Average Inventory = [Inventory at the beginning + Inventory at the year-end] / 2

= [$587,200 + $137700] / 2

= $724,900 / 2

= $362,450

Therefore, the Inventory Turnover Ratio = Annual Sales / Average Inventory

= $28,99,600 / $362,450

= 8.0 Times

“Hence, the Inventory Turnover for the year would be 8.0 Times”

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