Kent Inc. provided the following data for 2016 and 2017:
What are the inventory turnover ratio and the gross margin return on inventory investment for 2017?
A) Inventory turnover ratio = 3.00 times and the Gross margin return on inventory investment = 2%
B) Inventory turnover ratio = 2.00 times and the Gross margin return on inventory investment = 300%
C) Inventory turnover ratio = 3.09 times and the Gross margin return on inventory investment = 20%
D) Inventory turnover ratio = 3.00 times and the Gross margin return on inventory investment = 200%

Question

Kent Inc. provided the following data for 2016 and 2017:
 What are the inventory turnover ratio and the gross margin return on inventory investment for 2017?
A) Inventory turnover ratio = 3.00 times and the Gross margin return on inventory investment = 2% 
B) Inventory turnover ratio = 2.00 times and the Gross margin return on inventory investment = 300% 
C) Inventory turnover ratio = 3.09 times and the Gross margin return on inventory investment = 20% 
D) Inventory turnover ratio = 3.00 times and the Gross margin return on inventory investment = 200%

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory
= $645,000 / {($250,000+$180,000) / 2} = 3 times
Gross margin return on inventory investment = Gross margin / Average inventory
= $430,000 / {($250,000+$180,000) / 2} = 2 = 200%

Kent Inc Provided the Following Data for 2016 and 2017