Asked by Sheri Walton on Jun 28, 2024
Verified
The following information is available for Miguel Company at December 31 2016: beginning inventory $160000; ending inventory $240000; cost of goods sold $1050000; and sales $1800000. Everett's inventory turnover in 2016 is
A) 4.38 times.
B) 5.25 times.
C) 6.56 times.
D) 9 times.
Inventory Turnover
A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.
Inventory
Items held by a company for the purpose of sale or production, including raw materials, work-in-progress, and finished goods.
- Determine the inventory turnover ratio and realize its significance in the context of business activities.
Verified Answer
AB
Andie BaughmanJun 29, 2024
Final Answer :
B
Explanation :
Inventory turnover = Cost of goods sold / Average inventory
Average inventory = (Beginning inventory + Ending inventory) / 2
= ($160,000 + $240,000) / 2 = $200,000
Inventory turnover = $1,050,000 / $200,000 = 5.25 times
Average inventory = (Beginning inventory + Ending inventory) / 2
= ($160,000 + $240,000) / 2 = $200,000
Inventory turnover = $1,050,000 / $200,000 = 5.25 times
Learning Objectives
- Determine the inventory turnover ratio and realize its significance in the context of business activities.
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