Alpha Company had $45,000 in beginning inventory and $80,000 in ending inventory. Cost of goods sold for the period was $25,000. The inventory turnover is:
A)0.56.
B)0.3125.
C)0.4.
D)4.0.

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Average Inventory = ($45,000 + $80,000) / 2 = $62,500. Inventory Turnover = $25,000 / $62,500 = 0.4.

Alpha Company Had $45,000 in Beginning Inventory and $80,000 in Ending