Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 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) 42.00
D) 4.16
E) 20.00

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold (COGS) divided by average inventory. Given COGS is $25 million and inventory is $2 million, the turnover is $25 million / $2 million = 12.50.

Consider a Firm with a 2007 Net Income of $20