The financial statements of Midwest Tours are given below.
-Refer to the financial statements of Midwest Tours.The firm's inventory turnover ratio for 2009 is __________.
A)2.86
B)1.23
C)5.96
D)4.42
E)4.86

Question

The financial statements of Midwest Tours are given below. 
-Refer to the financial statements of Midwest Tours.The firm's inventory turnover ratio for 2009 is __________.
A)2.86 
B)1.23 
C)5.96 
D)4.42 
E)4.86

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing cost of goods sold by average inventory. Using the 2009 data from the income statement and balance sheet, we get: 
Inventory turnover ratio = Cost of Goods Sold / ((Beginning Inventory + Ending Inventory) / 2)
= 2,981,000 / ((840,000 + 920,000) / 2)
= 2,981,000 / 880,000
= 3.391
Therefore, the correct answer is not provided in the answer choices.

The Financial Statements of Midwest Tours Are Given Below