Question

Financial statement data at December 31 for Ecco Company are shown below. Cost of merchandise sold $552,500 Inventories: Beginning of year 200,000 End of year 140,000 Determine inventory turnover for the year. a.1.63 b.2.76 c.3.95 d.3.25

Answer 1

Answer:

Inventory turnover= 3.25

Explanation:

Giving the following information:

Cost of merchandise sold $552,500

Inventories:

Beginning of year 200,000

End of year 140,000

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= (200,000 + 140,000)/2= 170,000

Inventory turnover= 552,500/170,000

Inventory turnover= 3.25