Question

The 2016 financial statements of CVS Health Corporation reported the following information (in millions): 2016 2015 Net sales $177,526 $153,290 Cost of sales 148,669 126,762 Inventories, net 14,760 14,001 The inventory turnover ratio for 2016 is: A. 9.22 B. 11.48 C. 9.33 D. 10.34 E. None of the above

Answer 1

D. 10.34

Step-by-step explanation:

The computation of inventory turnover ratio is shown below:-

For computing the inventory turnover ratio first we need to find out the average inventory

Average inventory = (Opening stock + Closing stock) ÷ 2

= ($14,760 + $14,001) ÷ 2

= 14380.50

Inventory turnover ratio = Cost of goods sold ÷ Average inventory

= $148,669 ÷ 14380.50

= 10.34