Question

Sugar, Inc. sells $529,300 of goods during the year that have a cost of $428,600. Inventory was $30,083 at the beginning of the year and $34,338 at the end of the year. What is the inventory turnover ratio? (Round your final answer to 1 decimal place.)

Answer 1

Answer:

Inventory Turnover Ratio = 13 Times.

Explanation:

• Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory
• Average Inventory = (Opening Inventory+Closing Inventory) ÷ 2

Calculating average inventory first = (30,083+34,338) ÷ 2 = $32,210.5

Cost of goods sold = $ 428,600

Inventory Turnover ratio = $428,600 ÷ $ 32,210.5 = 13.3 times

Answer 2

Answer:

The inventory turnover ratio is 13.3 times.

Explanation:

The inventory turnover ratio is a measure to see how many times the average inventory of the business has been sold or turned over during a period of time. The inventory turnover ratio is calculated by dividing the cost of goods sold by the average inventory.

The average inventory = (opening inventory + closing inventory) / 2

Average inventory = (30083 + 34338) / 2  = 32210.5

Inventory turnover ratio = 428600 / 32210.5  = 13.3