The 2014 financial statements of Sito Company reported a beginning inventory of $80,000, an ending inventory of $120,000, and cost of goods sold of $900,000 for the year. Sito's inventory turnover ratio for 2014 is
A) 11.3 times.
B) 9.0 times.
C) 7.5 times.
D) 6.5 times.

Question

Quizplus · Accepted Answer

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

Average inventory = ($80,000 + $120,000) / 2 = $100,000

Inventory turnover ratio = $900,000 / $100,000 = 9.0 times

The 2014 Financial Statements of Sito Company Reported a Beginning