The 2010 financial statements of Sito Company reported a beginning inventory of $80,000, an ending inventory of $120,000, and cost of goods sold of $600,000 for the year.Sito's inventory turnover ratio for 2010 is

Question

Quizplus · Accepted Answer

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
= ($80,000 + $120,000) / 2
= $100,000

Inventory Turnover Ratio = $600,000 / $100,000
= 6 times

The 2010 Financial Statements of Sito Company Reported a Beginning