Question

A company's sales equal $60,000 and cost of goods sold equals $20,000. Its beginning inventory was $1,600 and its ending inventory is $2,400. The company's inventory turnover ratio equals:

Answer 1

The company's inventory turnover ratio, based on the financial data, equals 10 times.

What is the inventory turnover ratio?

The inventory turnover ratio measures the number of times the company sells and replaces its inventory over a given period.

The formula for calculating the Inventory Turnover Ratio is the Cost of Goods Sold divided by the Average Inventory.

The Average Inventory is the mean of the beginning and ending inventories.

Data and Calculations:

Sales revenue = $60,000

Cost of goods sold = $20,000

Beginning inventory = $1,600

Ending inventory = $2,400

Average inventory = $2,000 ($1,600 + $2,400)/2

Inventory turnover ratio = 10x ($20,000/$2,000)

Thus, the company sells and replaces its inventory over a period of 10 times.

Learn more about the inventory turnover ratio at brainly.com/question/18914383

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