Question

Use the following information for Shafer Company to compute inventory turnover for year 2.

Year 2 Year 1
Net sales $651,500 $583,700
Cost of goods sold 389,300 360,920
Ending inventory 78,500 80,180
a. 8.28
b. 4.89
c. 4.04
d. 7.25
e. 5.89

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

Year 2 Year 1

Net sales $651,500 $583,700

Cost of goods sold 389,300 360,920

Ending inventory 78,500 80,180

To calculate the inventory turnover, we need to use the following formula:

Inventory turnover= Cost of goods sold/ average inventory

Average inventory= (beginning inventory + ending inventory) / 2

Average inventory= 158,680/2= 79,340

Inventory turnover= 389,300/79,340

Inventory turnover= 4.91