Home › ACCA › Financial Accounting › Ratio Analysis › Cost of merchandise sold is $414,000. Inventory …
Cost of merchandise sold is $414,000. Inventory was $48,000 at the start and $55,000 at the end of the year. What is the inventory turnover (to one decimal)?
A8.0
B7.5
C9.0
D19.3
Answer & Solution
Correct answer: A. 8.0
1. Average inventory = ($55,000 + $48,000) / 2 = $51,500.
2. Inventory turnover = cost of merchandise sold / average inventory = $414,000 / $51,500.
3. = 8.0.
4. Trap: 19.3 (option D) uses sales of $994,000 in the numerator; inventory turnover uses cost of merchandise sold.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Inventory Turnover", p.298_
Related questions
A DuPont analysis breaks the return on equity into which three components?The market price per share is $70.00 and earnings per share is $28.43. What is the price-eDividends per share are $0.96 and the market price per share is $70.00. What is the divideCommon stock dividends are $8,000 and common stock of $83,000 has a $10 par value. What isNet income is $248,000 and sales are $994,000. What is the profit margin (to one decimal)?Gross profit is $580,000 and sales are $994,000. What is the gross profit percentage (to oNet income is $248,000 and preferred dividends are $12,000. Common stock of $83,000 has a Net income is $248,000 and preferred dividends are $12,000. Average common stockholders' e