Question

Gamble Corporation had beginning inventory $100,000, cost of goods purchased $700,000, and ending inventory $140,000. What was Gamble's inventory turnover

Answer 1

Inventory turnover= 5.5

Step-by-step explanation:

First, we need to calculate the cost of goods sold using the following formula:

COGS= beginning finished inventory + cost of goods purchased - ending finished inventory

COGS= 100,000 + 700,000 - 140,000

COGS= 660,000

Now, the inventory turnover:

Inventory turnover= Cost of goods sold/ average inventory

Average inventory= (beginning inventory + ending inventory) / 2

Average inventory= (100,000 + 140,000)/2= 120,000

Inventory turnover= 660,000 / 120,000

Inventory turnover= 5.5