Financial statements for Maraby Corporation appear below: Maraby Corporation's inventory turnover for Year 2 was closest to:
A)11.2
B)7.8
C)9.4
D)13.5

Question

Financial statements for Maraby Corporation appear below:   Maraby Corporation's inventory turnover for Year 2 was closest to:
A)11.2 
B)7.8 
C)9.4 
D)13.5

Quizplus · Accepted Answer

To calculate inventory turnover, divide the cost of goods sold by the average inventory. Inventory turnover = Cost of goods sold / (Beginning inventory + Ending Inventory) / 2. Using the figures from the financial statements, Maraby Corporation's inventory turnover for Year 2 = $2,300,000 / (($380,000 + $340,000) / 2) = 9.4. Therefore, the closest choice is C, 9.4.

Financial Statements for Maraby Corporation Appear Below: Maraby