Question

Waters Department Store had net credit ales of $16mil and cost of goods sold of $12mil for the year. The average inventory for the year amounted to $2mil. inventory turnover for the year is

Answer 1

Answer:

6 million is the inventory turnover

Explanation:

The formula to calculate inventory turnover = $\frac{Cost of goods sold}{Average Inventory}$

Here we are provided,

Cost of goods sold = $12 million

Average Inventory = $2 million

Or it is calculated by using the formula $\frac{Sales}{Inventory$

Here, we are not provided with total sales, therefore, this formula cannot be used.

Using the former formula we have,

$\frac{12 million}{2 million}$ = 6 million.

Final Answer

6 million is the inventory turnover