Question

Using sparky's financial information what is the company's inventory turnover ratio for year 2?

a. 7.18
b. 0.14
c. 6.94
d. 8.36

Answer 1

Sparky's inventory turnover ratio for Year 2 is approximately 7.18, calculated by dividing the Cost of Goods Sold ($104,090) by the average inventory ($14,500).

You can use the following calculation to get the inventory turnover ratio:

`\[ \text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold (COGS)}}{\text{Average Inventory}} \]`

The average inventory is calculated as the average of the beginning and ending inventory.

`\[ \text{Average Inventory} = \frac{\text{Inventory at the beginning} + \text{Inventory at the end}}{2} \]`

Given the information:

`\[ \text{Average Inventory} = (\$14,000 + \$15,000)/(2) = \$14,500 \]`

We can now compute the Year 2 inventory turnover ratio:

`\[ \text{Inventory Turnover Ratio} = (\$104,090)/(\$14,500) \]\[ \text{Inventory Turnover Ratio} \approx 7.18 \]`

So, the correct answer is:

b. 7.18

The complete question is:

(attached)