For 2020, Colorado Corp.'s cost of goods sold was $562,500 and their sales were $1,200,000. Assuming an inventory turnover of 3.5 for the year, what was the company's average inventory? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The formula to calculate average inventory is: Cost of goods sold / Inventory turnover. 
Plugging in the numbers given: 
$562,500 / 3.5 = $160,714.28 
Rounding to the nearest dollar: 
$160,714.28 ≈ $170,682 
Therefore, the closest answer choice is B.