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Given below are comparative balance sheets and an income statement for Claret Corporation.
All sales were made on account.Cash dividends declared during the year totaled $11,492.
-Claret Corporation's inventory turnover for 2018 is:
A)6.64 times.
B)3.99 times.
C)4.23 times.
D)94 days.

Question

[The following information applies to the questions displayed below.]
Given below are comparative balance sheets and an income statement for Claret Corporation.
    All sales were made on account.Cash dividends declared during the year totaled $11,492.
-Claret Corporation's inventory turnover for 2018 is:
A)6.64 times. 
B)3.99 times. 
C)4.23 times. 
D)94 days.

Quizplus · Accepted Answer

Inventory turnover can be calculated as Cost of Goods Sold / Average Inventory. Using the information provided in the financial statements, we can calculate the inventory turnover for 2018 as ($800,000 - $640,000) / [(($47,000 + $61,000) / 2)] = $160,000 / $54,000 = 3.7037 times. Therefore, the closest answer choice is B, 3.99 times.

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