Question

Use the following information for Shafer Company to compute inventory turnover for year 2.

Year 2 Year 1
Net sales $657,500 $584,900
Cost of goods sold 390,500 361,040
Ending inventory 79,700 81,380

Answer 1

4.85 times

Step-by-step explanation:

The computation of the inventory turnover for the year 2 is shown below:

we know that

Inventory turnover = Cost of goods sold ÷ Average inventory

Here,

Average inventory is

= ($79,700 + $81,380 ÷ 2)

= $80,540

So,

The Inventory turnover is

= $390,500 ÷ $80,540

= 4.85 times