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

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average merchandise inventory

To find the average merchandise inventory, we take the sum of beginning and ending inventory and divide by 2:
Average merchandise inventory = (Beginning inventory + Ending inventory) / 2
= ($195,000 + $205,000) / 2
= $200,000

Now we can calculate the inventory turnover ratio:
Inventory turnover ratio = $1,600,000 / $200,000
= 8 times

So the closest answer choice is C, which is 8.00 times.

Topiary's Unlimited Has a Cost of Goods Sold of $1,600,000