A retailer's cost of goods sold during the year equals $500,000; its average inventory on hand (at cost)equals $225,000 and planned reductions equal $25,000.Its annual rate of stock turnover equals 2.

Question

Quizplus · Accepted Answer

The rate of stock turnover is calculated as the cost of goods sold divided by the average inventory at cost. In this case, it would be $500,000 / $225,000 = 2.22, not 2. The planned reductions are not relevant to this calculation.

A Retailer's Cost of Goods Sold During the Year Equals