Question

Alamo Company has sales, cost of goods sold, and average ending inventory for the current year in the following amounts: $650,000, $500,000, and $128,000, respectively.

Calculate the amount of the company's inventory turnover for the year. (Round your answer to 2 decimal places.)

What is the inventory turnover?

Answer 1

The inventory turnover for Alamo Company is 3.91 when you divide the cost of goods sold ($500,000) by the average ending inventory ($128,000) and round the answer to two decimal places.

Step-by-step explanation:

To calculate the inventory turnover, we divide the cost of goods sold by the average ending inventory. In this case, Alamo Company has a cost of goods sold (COGS) of $500,000 and an average ending inventory of $128,000.

To calculate the inventory turnover for the year, we need to divide the cost of goods sold by the average ending inventory. The cost of goods sold is $500,000 and the average ending inventory is $128,000To compute the inventory turnover, we use the formula:

Inventory Turnover = Cost of Goods Sold / Average Ending Inventory

Plugging in the values:

Inventory Turnover = $500,000 / $128,000 = 3.90625

Rounding to two decimal places, the inventory turnover is 3.91.