Braylon is the accountant at Full-Grain Wood Flooring. Full-Grain had gross profits of $500,000, sales returns and allowances of $50,000, and cost of goods sold of $300,000. Full-Grain's average value of its inventory is $75,000. What is the inventory turnover ratio for the company?
A) 4.00
B) 3.00
C) 10.00
D) 2.00
E) 6.00

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. Here, the cost of goods sold is $300,000, and the average inventory value is $75,000. Thus, the inventory turnover ratio is $300,000 / $75,000 = 4.00.

Braylon Is the Accountant at Full-Grain Wood Flooring