A company's January 1 balance in Merchandise Inventory is $51,000. The December 31 balance is
$43,000. Cost of goods sold is $232,000. The company's inventory turnover is:

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Average Inventory is the sum of the beginning and ending inventory divided by 2. In this case, Average Inventory = ($51,000 + $43,000) / 2 = $47,000. Inventory Turnover = $232,000 / $47,000 = 4.94 to 1.

A Company's January 1 Balance in Merchandise Inventory Is $51,000