Question

John Company has cost of goods sold of $100,000. Beginning inventory is $1,500 and ending inventory is $2,000. Calculate John Company's inventory turnover.

Answer 1

Answer:

57.14

Explanation:

Inventory Turnover is a ratio to show how many times a company has used, sold and replaced inventory (stock) over a given period of time.

It is calculated as follows:

Cost of Goods Sold / Average Inventory

To calculate that, we need find out average inventory, which is:

(Inventory at beginning + inventory at end) / 2

That is: ($1500 + $2000) / 2 = $1750.

Thus, inventory turnover is:

$100,000 / $1750 = 57.14 (approx. 2 decimal places)