Question

A company's net sales revenue is $25,000,000. Its cost of goods sold is $15,000,000. Its beginning inventory is $100,000 and its ending inventory is $200,000. Which of the following is its rate of inventory turnover?

A) 100
B) 75
C) 1.67
D) 0.01

Answer 1

The company's rate of inventory turnover is 100.

Step-by-step explanation:

The rate of inventory turnover can be calculated using the formula:

Inventory Turnover = Cost of Goods Sold / Average Inventory

Given the cost of goods sold is $15,000,000 and the average inventory is $(100,000 + 200,000) / 2 = $150,000, the inventory turnover rate is:

Inventory Turnover = $15,000,000 / $150,000 = 100

Therefore, the correct answer is A) 100.