Giambi Corporation had beginning inventory $100,000, cost of goods purchased $700,000, and ending inventory $140,000. What was Giambi's inventory turnover?

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Cost of goods sold = Beginning inventory + Purchases - Ending inventory
Cost of goods sold = $100,000 + $700,000 - $140,000 = $660,000

Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($100,000 + $140,000) / 2 = $120,000

Inventory turnover = $660,000 / $120,000 = 5.5 times.

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