Bosio Corporation's computation of cost of goods sold is: Bosio's inventory turnover is

Question

Bosio Corporation's computation of cost of goods sold is:  Bosio's inventory turnover is

Quizplus · Accepted Answer

To calculate inventory turnover, divide the cost of goods sold by the average inventory. We do not have the inventory balance in this question, but we are given the cost of goods sold. Therefore, we cannot calculate the exact inventory turnover. However, we can make an educated guess based on the given options. 
Option A: If we assume the average inventory to be twice the cost of goods sold, then the inventory turnover would be 2.5. This may be too low of an inventory turnover for a company, as it suggests that the inventory is not selling quickly enough.
Option B: If we assume the average inventory to be 2.7 times the cost of goods sold, then the inventory turnover would be 1. Therefore, this is the most likely option given that inventory turnover should be greater than 1.
Option C: If we assume the average inventory to be 3.5 times the cost of goods sold, then the inventory turnover would be less than one (0.9). This suggests that the company is carrying too much inventory relative to its sales and may have excess inventory that is not selling.
Option D: If we assume the average inventory to be 3.8 times the cost of goods sold, then the inventory turnover would be less than one (0.87). This is also too low of an inventory turnover for a company.

Bosio Corporation's Computation of Cost of Goods Sold Is