Mccaughey Corporation's most recent balance sheet and income statement appear below:

-The inventory turnover for Year 2 is closest to:
A) 1.20
B) 0.83
C) 6.64
D) 7.30

Question

Mccaughey Corporation's most recent balance sheet and income statement appear below:

-The inventory turnover for Year 2 is closest to:
A) 1.20 
B) 0.83 
C) 6.64 
D) 7.30

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory 
For Year 2:
Cost of goods sold = 3,323
Average inventory = (2,471 + 2,294) / 2 = 2,383.5
Inventory turnover = 3,323 / 2,383.5 = 1.394
Therefore, the closest answer is C) 6.64, which is the reciprocal of the answer we just calculated (i.e. 1/0.149 = 6.64).

Mccaughey Corporation's Most Recent Balance Sheet and Income Statement Appear