What is the inventory turnover ratio for ABC Corp.if cost of goods sold equals $5,000,current ratio equals 3,quick ratio equals 1.5,and the firm has $1,800 in current assets?
A) 2.78 times
B) 4.17 times
C) 5.56 times
D) 8.33 times

Question

Quizplus · Accepted Answer

Current ratio = current assets / current liabilities3 = $1,800 / current liabilitiesCurrent liabilities = $600Quick ratio = (current assets − inventory) / current liabilities1.5 = ($1,800 − inventory) / $600Inventory = $900Inventory turnover = cost of goods sold / inventoryInventory turnover = $5,000 / $900Inventory turnover = 5.56 times

What Is the Inventory Turnover Ratio for ABC Corp