A firm with a stockturn rate of 4 sells products that cost it $100,000. This requires _____ worth of inventory.
A) $25,000
B) $20,000
C) $80,000
D) $400,000
E) $500,000

Question

Quizplus · Accepted Answer

Stockturn rate is calculated as follows:
Stockturn rate = Cost of goods sold / Average inventory
We are given the stockturn rate as 4. 
Using the formula, we can calculate the cost of goods sold as:
Cost of goods sold = Stockturn rate x Average inventory
We are given the cost of goods sold as $100,000. 
Substituting these values, we get:
$100,000 = 4 x Average inventory
Average inventory = $25,000
Therefore, the answer is A) $25,000.

A Firm with a Stockturn Rate of 4 Sells Products