The following information is available for Charles Company: The inventory turnover ratio for 2010 is

Question

The following information is available for Charles Company:  The inventory turnover ratio for 2010 is

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. 
From the given information, we can calculate:
Cost of goods sold for 2010 = $6,000,000 
Average inventory for 2010 = ($800,000 beginning inventory + $1,000,000 ending inventory)/2 = $900,000

Inventory turnover ratio for 2010 = $6,000,000 / $900,000 = 6.67 times (rounded to two decimal places)

The closest option is B, which is 6.2 times.

The Following Information Is Available for Charles Company: the Inventory