Answer:
500,000÷ 200,000 = 2.5
Explanation:
inventory turnover is calculated as
cost of goods sold ÷ Average inventory
From the information of Baxter department store's financial statement, cost of goods sold can be calculated as
Opening inventory + purchases - closing inventory
100,000 + 700,000 - 300,000 = 500,000
cost of goods sold = 500,000
Average stock is calculated as opening inventory + closing inventory ÷ 2
100,000 + 300,000 ÷ 2 = 200,000
Average inventory = 200,000
Therefore inventory turnover = 500,000÷ 200,000 = 2.5
