Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $20 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?
A) 12.50
B) 10.00
C) 40.00
D) 8.00
E) 30.00

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold (COGS) divided by average inventory. Given COGS is $20 million and inventory is $2 million, the inventory turnover is $20 million / $2 million = 10.00.

Consider a Firm with an Annual Net Income of $20