Using the information provided,what is the inventory turnover for the firm? Perfect Purchase Electronics
Selected Income Statement Items,2014
Cash Sales $1,500,000
Credit Sales $7,500,000
Total Sales $9,000,000
COGS $6,000,000
Perfect Purchase Electronics
Selected Balance Sheet Accounts
12/31/2014 12/31/2013 Change
Accounts Receivable $270,000 $240,000 $30,000
Inventory $125,000 $100,000 $25,000
Accounts Payable $110,000 $90,000 $20,000
A)23.53 times
B)53.33 times
C)48.00 times
D)60.00 times

Question

Quizplus · Accepted Answer

Inventory turnover = COGS / Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Therefore, Average Inventory for 2014 = ($100,000 + $125,000) / 2 = $112,500
Inventory turnover = $6,000,000 / $112,500 = 53.33 times.

Using the Information Provided,what Is the Inventory Turnover for the Firm