A national ﬁrm has sales of $575,000 and cost of goods sold of $368,000. At the beginning of the year, the inventory was $42,000. At the end of the year, the inventory balance was $45,000. What
Is the inventory turnover rate?

Question

Quizplus · Accepted Answer

The inventory turnover rate is calculated as Cost of Goods Sold divided by the average inventory. Average inventory = ($42,000 + $45,000) / 2 = $43,500. Inventory turnover rate = $368,000 / $43,500 = 8.46 times.

A National ﬁRm Has Sales of $575,000 and Cost of Goods