A national firm has sales of $575,000 and cost of goods sold of $368,000. At the beginning of the year, the inventory was $42,000. At the end of the year, the inventory balance was $45,000. What is the inventory turnover rate?

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Quizplus · Accepted Answer

The inventory turnover rate is calculated as Cost of Goods Sold (COGS) divided by the average inventory. COGS is $368,000. The average inventory is calculated as (Beginning Inventory + Ending Inventory) / 2 = ($42,000 + $45,000) / 2 = $43,500. Therefore, the inventory turnover rate is $368,000 / $43,500 = 8.46 times.

A National Firm Has Sales of $575,000 and Cost of Goods