Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. The company's inventory turnover for Year 2 is closest to:
A) 5.92
B) 1.05
C) 6.07
D) 6.23

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Average inventory = (Ending inventory + Beginning inventory) / 2

Average inventory for Year 2 = (114,000 + 120,000) / 2 = $117,000

Inventory turnover for Year 2 = $710,000 / $117,000 = 6.07

Spomer Corporation's Inventory at the End of Year 2 Was