Anthony Corporation reported the following amounts for the year: Anthony's inventory turnover ratio is:

Question

Anthony Corporation reported the following amounts for the year:  Anthony's inventory turnover ratio is:

Quizplus · Accepted Answer

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. 
Inventory turnover ratio = Cost of goods sold / ((Beginning inventory + Ending inventory) / 2)

Plugging in the numbers from Anthony Corporation's financial statement: 
Inventory turnover ratio = 1,225,000 / ((285,000 + 360,000) / 2) 
Inventory turnover ratio = 1,225,000 / 322,500 
Inventory turnover ratio = 3.8

Therefore, Anthony's inventory turnover ratio is 2.76.

Anthony Corporation Reported the Following Amounts for the Year