Question

Jim had a beginning inventory of $5,500. During the month of April, he purchased $4,000 of food and had an ending inventory of $3,800 at the end of the month. His sales for April were $8,750. What was his inventory turnover?

Answer 1

Answer:

1.23

Explanation:

Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period.

Cost of Sales=Opening Inventory+Purchases-Closing Inventory

                      =5,500+4,000-3,800= 5,700

Average Inventory= Opening + Closing/2

                              = 5,500+3,800/2= 4,650

Inventory Turnover Ratio= Cost of Sales

                                            Avg Inventory

                                          = 5,700/4,650=1.23