Selected year-end data for the Brayer Company are presented below:
The company has no prepaid expenses,and inventories remained unchanged during the year.Based on these data,the company's inventory turnover ratio for the year was closest to which of the following?

Question

Selected year-end data for the Brayer Company are presented below: 
The company has no prepaid expenses,and inventories remained unchanged during the year.Based on these data,the company's inventory turnover ratio for the year was closest to which of the following?

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory
Average inventory = (Beginning inventory + Ending inventory) / 2
Since inventories remained unchanged during the year, the beginning inventory is equal to the ending inventory. Therefore, the average inventory is equal to the ending inventory.
Average inventory = $153,000
Cost of goods sold = $255,000
Inventory turnover ratio = $255,000 / $153,000 = 1.67 times. Therefore, the closest answer choice is B) 1.67 times.

Selected Year-End Data for the Brayer Company Are Presented Below