Question

WaterwayCorporation had net credit sales of $13100000 and cost of goods sold of $9070000 for the year. The average inventory for the year amounted to $1814000. The inventory turnover for the year is _________.

Answer 1

Inventory turnover = 5 times

Step-by-step explanation:

Average inventory measures the rate or speed at which a business sells and replaces its inventory. The faster the better. Measured in days, it is the average length of time it takes a business to sells its inventory.

It is calculated as follows:

Average inventory turnover = cost of goods sold/Average inventory

For Waterway Corporation, the inventory turnover is computed as follows:

= $9,070,000/$1,814,000

= 5 times

Inventory turnover = 5 times