The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit. What is the inventory turnover for this company?

Question

The following information pertains to Unique Company.Assume that all balance sheet amounts represent both average and ending balance figures.Assume that all sales were on credit.  What is the inventory turnover for this company?

Quizplus · Accepted Answer

Inventory Turnover = Cost of Goods Sold / Average Inventory 
Given: 
Cost of Goods Sold = $120,000 
Ending Inventory = $45,000 
Beginning Inventory = $30,000 
Average Inventory = (30,000 + 45,000) / 2 = $37,500 
Inventory Turnover = 120,000 / 37,500 = 3.2 times 
The answer options provided are all incorrect, but the closest answer is B (2.25 times).

The Following Information Pertains to Unique Company