Question

The following information is available for Everett Company at December 31, 2015: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $1,050,000; and sales $1,800,000. Everett's inventory turnover in 2015 is

A) 8.7 times.
B) 10.5 times.
C) 13.2 times.
D) 18 times.

Answer 1

The inventory turnover for Everett company in 2015 is 10.5 times.

Step-by-step explanation:

The inventory turnover for Everett company in 2015 can be calculated by dividing the cost of goods sold by the average inventory. Average inventory can be calculated by adding the beginning and ending inventory and dividing by 2. Using the given information:

Beginning inventory: $80,000

Ending inventory: $120,000

Cost of goods sold: $1,050,000

Average inventory = (Beginning inventory + Ending inventory) / 2 = ($80,000 + $120,000) / 2 = $100,000

Inventory turnover = Cost of goods sold / Average inventory = $1,050,000 / $100,000 = 10.5 times

Therefore, the inventory turnover for Everett company in 2015 is 10.5 times (option B).