Question

Compute New Home​'s inventory turnover rate for the year.​ (Round to two decimal​ places.) Select the labels and enter the amounts to compute the inventory turnover rate.

Answer 1

Inventory Turnover Ratio = 7.43 times

Explanation: Due to missing data following assumptions have been taken:

Assumptions: Sales Value: $600,000

Gross Profit: $80,000

Opening Inventory: $ 60,000

Closing Inventory: $80,000

Inventory Turnover Ratio =
`(Cost\ Of\ Goods\ Sold)/(Average\ Stock)`

Cost Of Goods Sold = Sales - Gross Profit = $600,000 - $80,000 = $520,000

Average Stock =
`(OS +\ CS)/(2)`

WHERE, OS = Opening Stock

CS= Closing Stock

Average Stock = $70,000

Inventory Turnover Ratio =
`(520,000)/(70,000)` = 7.43 times