Question

Wagon Department Store had net credit sales of $16,000,000 and cost of goods sold of $15,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is Group of answer choices 8 times. 15 times. 7.5 times. 5 times.

Answer 1

The answer is "7.5 times"

Step-by-step explanation:

Inventory turnover represents the rate where an enterprise sells or substitutes its inventory for a certain period. The stock revenue ratio is the cost of products sold, that are divided by the total equity for the same period.

The efficacy of an entrepreneur's turning stock into sales is evaluated. This ratio also demonstrates whether well the costs of the stock are handled, if the stock is too large or not.

`\text{Inventory turnover ratio} = \frac{\text{Cost of goods sold}}{\text{Average Inventory}}`

`= (15000000)/(2000000)\\\\= (15)/(2)\\\\ = 7.5\ times`