The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's inventory turnover ratio in 2014 was
A) 13.3 times.
B) 9.8 times.
C) 12.6 times.
D) 8.0 times.

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($110,000 + $70,000) / 2 = $90,000

Inventory turnover ratio = $880,000 / $90,000 = 9.8 times.

The Following Information Was Available for Hoover Company at December