Calculate the inventory turnover at cost for Ricky's Department Store. The starting inventory at cost was $485,800 and the ending inventory at cost was $236,000. Cost of goods sold for the year totaled $2,670,660. (Round your answer to the nearest tenth)
A) 7.4
B) 5.5
C) 3.7
D) 11.3

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated as the cost of goods sold divided by the average inventory. The average inventory is the sum of the starting and ending inventory divided by 2. So, the average inventory is ($485,800 + $236,000) / 2 = $360,900. The inventory turnover ratio is then $2,670,660 / $360,900 = 7.4.

Calculate the Inventory Turnover at Cost for Ricky's Department Store