Question

Compute New Home​'s inventory turnover rate for the year.​ (Round to two decimal​ places.) Select the labels and enter the amounts to compute the inventory turnover rate.

Answer 1

Answer:

Inventory Turnover Ratio = 7.43 times

Explanation:  Due to missing data following assumptions have been taken:

Assumptions:  Sales Value: $600,000

                        Gross Profit: $80,000

                        Opening Inventory: $ 60,000

                        Closing Inventory: $80,000

Inventory Turnover Ratio = $\frac{Cost\ Of\ Goods\ Sold}{Average\ Stock}$

Cost Of Goods Sold = Sales - Gross Profit = $600,000 - $80,000 = $520,000

Average Stock = $\frac{OS +\ CS}{2}$

WHERE, OS = Opening Stock

              CS= Closing Stock

Average Stock = $70,000

Inventory Turnover Ratio = $\frac{520,000}{70,000}$ = 7.43 times