Question

Net sales $410,660 Cost of goods sold (purchased items) $102,500 Net income after taxes $ 45,415 Current assets $299,665 Current liabilities $276,230 Avg. inventory value $ 91,620 Find out the inventory turnover from the information provided above. Group of answer choices 1.1 0.3 1.6 0.9 Do not have enough information to compute

Answer 1

1.1 times

Step-by-step explanation:

The formula to compute the inventory turnover ratio is shown below:

Inventory turnover ratio = Cost of goods sold ÷ average inventory

= $102,500 ÷ $91,620

= 1.12 times

Since the average inventory is given so there is no need to find out. We simply apply the formula which is presented above.

Moreover, it shows a relationship between the cost of goods sold and the average inventory