The following information is available for Oakland Company: $\begin{array}{lrr}
&2017&2016\
\text { Accounts receivable } & \$ 360,000 & \$ 400,000 \
\text { Inventory } & 340,000 & 400,000 \
\text { Net credit sales } & 2,470,000 & 1,400,000 \
\text { Cost of goods sold } & 1,850,000 & 1,060,000 \
\text { Net income } & 300,000 & 170,000
\end{array}$ The inventory turnover ratio for 2017 is
A) 6.7 times.
B) 5.0 times.
C) 5.4 times.
D) 4.6 times.

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated as Cost of Goods Sold divided by Average Inventory. For 2017, the Cost of Goods Sold is $1,850,000. The average inventory is calculated as the sum of the beginning and ending inventory divided by 2, which is ($400,000 + $340,000) / 2 = $370,000. Therefore, the inventory turnover ratio for 2017 is $1,850,000 / $370,000 = 5.0 times.

The Following Information Is Available for Oakland Company The Inventory Turnover Ratio for 2017 Is A) 6

The Following Information Is Available for Oakland Company The Inventory Turnover Ratio for 2017 Is
A) 6