Question

Goods available for sale are $40000, beginning inventory is $16000, ending inventory is $20000, the cost of goods sold $50000, what is the inventory turnover

Answer 1

The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory. With a cost of goods sold of $50,000 and an average inventory of $18,000, the inventory turnover ratio is approximately 2.78.

Step-by-step explanation:

The student has asked how to calculate the inventory turnover ratio given the following information: Goods available for sale are $40,000, beginning inventory is $16,000, ending inventory is $20,000, and the cost of goods sold is $50,000.

To calculate the inventory turnover ratio, we use the formula:

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Average Inventory is calculated by adding the beginning inventory and the ending inventory, then dividing by 2:

Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = ($16,000 + $20,000) / 2
Average Inventory = $18,000

Now, we can calculate the inventory turnover ratio:

Inventory Turnover Ratio = $50,000 / $18,000
Inventory Turnover Ratio = 2.78

This means the company's inventory was turned over approximately 2.78 times during the period.

Answer 2

2.78

Step-by-step explanation:

Inventory turn over is the same as the inventory turn over ratio. Inventory turn over is defined simply as the ratio of the cost of goods that was sold (net sales) to the average inventory at the selling price.

Inventory turn over = Cost of goods/average inventory

Cost of goods sold = $50000

Average inventory = beginning of inventory + ending inventory/2

Average inventory = $16000+$20000/2

Average inventory = $36000/2

Average inventory = $18000

Inventory turn over = $50000/$18000

Inventory turn over= 2.78