A retailer's cost of goods sold during the year equals $750,000 and its average inventory on hand (at cost)equals $375,000.Its annual rate of stock turnover equals 2.

Question

Quizplus · Accepted Answer

The formula for stock turnover is:

Stock turnover = Cost of goods sold / Average inventory on hand

In this case, we are given:

Cost of goods sold = $750,000
Average inventory on hand (at cost) = $375,000

Substituting into the formula, we get:

Stock turnover = $750,000 / $375,000 = 2

Therefore, the annual rate of stock turnover for this retailer is 2, and the answer is A.

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