Answer:
4.0 times
Explanation:
Given that,
2016:
Accounts receivables = $400,000
Inventory = 320,000
Net credit sales = 1,400,000
Cost of goods sold = 1,060,000
Net income = 170,000
2017:
Accounts receivables = $360,000
Inventory = 280,000
Net credit sales = 3,000,000
Cost of goods sold = 1,200,000
Net income = 300,000
Inventory turnover ratio refers to the ratio between the cost of goods sold and average inventory.
Average inventory:
= (Beginning inventory + Ending inventory) / 2
= ($320,000 + $280,000) / 2
= $300,000
Therefore, the inventory turnover ratio for 2017 is as follows:
= Cost of goods sold / Average inventory
= 1,200,000 / 300,000
= 4.0 times
