Giambi Corporation had beginning inventory $100,000, cost of goods purchased $800,000, and ending inventory $150,000. What was Giambi's inventory turnover?

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory
Average inventory = (Beginning inventory + Ending inventory) / 2

Cost of goods sold = Cost of goods purchased - Ending inventory + Beginning inventory
Cost of goods sold = $800,000 - $150,000 + $100,000 = $750,000

Average inventory = ($100,000 + $150,000) / 2 = $125,000

Inventory turnover = $750,000 / $125,000 = 6.0 times.

Giambi Corporation Had Beginning Inventory $100,000, Cost of Goods Purchased