Question

Cheyenne Corp. had the following records:

2017 2016
Ending inventory $34150
$30390
Cost of goods sold 211600 222040

What is Cheyenne inventory turnover ratio for 2017? (rounded)

Answer 1

Ans. Inventory turnover ratio (2017) = 7

Step-by-step explanation:

Hi, the formula to find the inventory turnover ratio is as follows.

`Inventory TurnoverRatio=(COGS)/(Average Invetory)`

Where:

COGS= Cost of Goods Sold

If we need to find the inventory turnover ratio, first we need to find the average inventory, that is:

`AverageInventory=((34150+30390))/(2) =32270`

Since we already know the COGS for 2017, the answer is as follows.

`InventoryTurnoverRatio(2017)=(211600)/(32270) =7`

That is 7 times a year (rounded).

Best of luck.