The following information was taken from the financial statements of Sunshine City: Total current assets
$ 53,000
Property, plant, and equipment
6,000
Current liabilities
21,000
Long-term liabilities
4,000
Owner's equity
34,000
Beginning inventory
31,000
Ending inventory
33,000
Cost of goods sold
152,000
Net income
42,000

The inventory turnover (rounded to one decimal place) for Sunshine City is

Question

The following information was taken from the financial statements of Sunshine City: Total current assets
$ 53,000
Property, plant, and equipment
6,000
Current liabilities
21,000
Long-term liabilities
4,000
Owner's equity
34,000
Beginning inventory
31,000
Ending inventory
33,000
Cost of goods sold
152,000
Net income
42,000
​
The inventory turnover (rounded to one decimal place) for Sunshine City is

Quizplus · Accepted Answer

Inventory turnover is calculated as cost of goods sold divided by average inventory. The average inventory is calculated by adding beginning and ending inventory and dividing by 2. Therefore, the average inventory is ($31,000 + $33,000)/2 = $32,000. The cost of goods sold is given as $152,000. Therefore, the inventory turnover is $152,000/$32,000 = 4.75 or 4.8 times (rounded to one decimal place). The closest option is C.

The Following Information Was Taken from the Financial Statements of Sunshine