Cox Corporation has a cost of goods sold of $1,600,000.The beginning merchandise inventory was $195,000 and the ending merchandise inventory is $205,000.Cox's inventory turnover ratio is:

Question

Quizplus · Accepted Answer

Inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory level.

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($195,000 + $205,000) / 2 = $200,000

Inventory turnover ratio = Cost of goods sold / Average inventory

Inventory turnover ratio = $1,600,000 / $200,000 = 8.00 times

Therefore, the answer is (C) 8.00 times.

Cox Corporation Has a Cost of Goods Sold of $1,600,000