Selected financial statement numbers for Frederick Company are given below:

- Refer to Exhibit 14-5. Using the information above, calculate Frederick's inventory turnover (round to two decimal places).

Question

Selected financial statement numbers for Frederick Company are given below:

- Refer to Exhibit 14-5. Using the information above, calculate Frederick's inventory turnover (round to two decimal places).

Quizplus · Accepted Answer

The inventory turnover can be calculated by dividing the cost of goods sold by the average inventory. Cost of goods sold for Frederick Company is $1,382,000 and the average inventory is (($185,000 + $215,000)/2) = $200,000. Therefore, inventory turnover = $1,382,000 / $200,000 = 6.91 times. Rounded to two decimal places, inventory turnover is 43.22 times (closest to 6.91). Therefore, the best choice is C.

Selected Financial Statement Numbers for Frederick Company Are Given Below