Question

The following information was available for Kingbird, Inc. at December 31, 2017: beginning inventory $70000; ending inventory $108000; cost of goods sold $644000; and sales $888000. Kingbird inventory turnover ratio in 2017 was

Answer 1

Answer:

Inventory turnover ratio = 7.2 times

Explanation:

Given:

Beginning inventory = $70,000

Ending inventory = $108,000

Cost of goods sold = $644,000

Sales = $888,000

Find:

Inventory turnover ratio

Computation:

Average inventory = [Beginning inventory + Ending inventory] / 2

Average inventory = ($70,000 + $108,000) / 2

Average inventory = $89,000

Inventory turnover ratio =  Cost of goods sold / Average inventory

Inventory turnover ratio = $644,000 / $89,000

Inventory turnover ratio = 7.2 times