Answer:
The merchandise inventory turnover during 2012 is 8 times.
Explanation:
The following information is given:
Sales - $ 2,000,000
Cost of goods sold - $1,400,000
Merchandise inventory Beginning of year - $ 155,000
Merchandise inventory End of year - $ 195,000
After considering these information, it is easy to calculate the merchandise inventory turnover. The formula is shown below:
Merchandise Inventory Turnover = COGS ÷ Average inventory
where average inventory = (opening inventory + ending inventory) ÷ 2
So,
Average inventory = ( $ 155,000 + $ 195,000) ÷ 2
= $175,000
Now, we can compute easily
Merchandise Inventory Turnover = 1,400,000 ÷ $175,000
= 8 times
Thus, the merchandise inventory turnover during 2012 is 8 times.
