Excerpts from Shelton Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,320 and the cost of goods sold was $890.
-The inventory turnover for Year 2 is closest to:
A) 6.59
B) 7.42
C) 1.25
D) 0.80

Question

Excerpts from Shelton Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,320 and the cost of goods sold was $890.
-The inventory turnover for Year 2 is closest to:
A) 6.59 
B) 7.42 
C) 1.25 
D) 0.80

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Without specific figures, the closest choice is based on typical turnover rates, and 6.59 is a reasonable estimate for many industries.

Excerpts from Shelton Corporation's Most Recent Balance Sheet Appear Below