The following balance sheet information is provided for Gaynor Company: Assuming Year 2 cost of goods sold is $153,300, what is the company's inventory turnover?
$$\begin{array} { | l | r r | r r | }
\hline \text { Assets } & & 2014 & 2013 \
\hline \text { Cash } & \$ & 4,000 & \$ & 2,000 \
\hline \text { Accounts receivable } & & 15,000 & & 12,000 \
\hline \text { Inventory } & \$ & 35,000 & \$ & 38,000 \
\hline
\end{array}$$
A)4.0 times
B)4.4 times
C)4.2 times
D)None of these answers is correct.

Question

The following balance sheet information is provided for Gaynor Company: Assuming Year 2 cost of goods sold is $153,300, what is the company's inventory turnover?
$$\begin{array} { | l | r r | r r | } 
\hline \text { Assets } & & 2014 & 2013 \
\hline \text { Cash } & \$ & 4,000 & \$ & 2,000 \
\hline \text { Accounts receivable } & & 15,000 & & 12,000 \
\hline \text { Inventory } & \$ & 35,000 & \$ & 38,000 \
\hline
\end{array}$$
A)4.0 times
B)4.4 times
C)4.2 times
D)None of these answers is correct.

Quizplus · Accepted Answer

The inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Average Inventory = (35,000 + 38,000) / 2 = 36,500. Inventory Turnover = 153,300 / 36,500 = 4.2 times.

The Following Balance Sheet Information Is Provided for Gaynor Company