Question

Suppose Kendall's had cost of goods sold during the year of $ 260 comma 000. Beginning merchandise inventory was $ 20 comma 000​, and ending merchandise inventory was $ 35 comma 000. Determine Kendall's inventory turnover for the year. Round to the nearest hundredth.

Answer 1

Answer:

Inventory turnover = 9.45

Explanation:

Inventory turnover is defined as the ratio between Cost of good sold and average inventory.

Average inventory is defined as follows, where BI = Beginning merchandise inventory and EI = Ending merchandise inventory:

$Average Inventory = \frac{BI + EI}{2}$

$Average Inventory=\frac{20000+35000}{2}=27500$

then:

$Turnover = \frac{260000}{27500} \\Turnover = 9.45$