Question

The following information is available for Miguel Company at December 31, 2020: beginning inventory $160,000; ending inventory $240,000; cost of goods sold $1,050,000; and sales $1,800,000. Everett’s inventory turnover in 2020 is

Answer 1

5.25

Step-by-step explanation:

Inventory turnover = Cost of goods sold / Average inventory

Cost of goods sold = $1,050,000

Average inventory = (Beginning Inventory + Ending Inventory) /2

Average inventory = ($160,000 + $240,000) / 2 = $200,000

Next, use the average inventory value in the turnover formula above;

Inventory turnover = 1,050,000 / 200,000

= 5.25

Therefore, Everett's inventory turnover in 2020 is 5.25 times.