Deborah Inc. ,an online retail store,recorded an inventory of $3,000 as of December 31,2012.Its inventory stood at $3,500 on December 31,2013.The cost of goods sold for the corresponding year was $15,000.Which of the following indicates the inventory turnover ratio of Deborah Inc.?

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory

To find the average inventory: 
Average inventory = (Beginning inventory + Ending inventory) / 2  
Average inventory = ($3,000 + $3,500) / 2 
Average inventory = $3,250

Now, we can calculate the inventory turnover ratio: 
Inventory turnover ratio = $15,000 / $3,250 
Inventory turnover ratio = 4.61

Therefore, the answer is C, 4.61.