For the year ended December 31, 2014 Depot Max's cost of merchandise sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max's inventory turnover for the year.
A) 8.7
B) 7.8
C) 8.3
D) 44

Question

Quizplus · Accepted Answer

Inventory Turnover = Cost of Merchandise Sold / Average Inventory

Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($6,540 + $7,250) / 2
Average inventory = $6,895

Inventory turnover = $56,900 / $6,895
Inventory turnover = 8.24 ≈ 8.3

Therefore, the answer is C, 8.3.

For the Year Ended December 31, 2014 Depot Max's Cost