Cost of goods sold was $112,500, beginning inventory was $18,000 and ending inventory was $15,000. What is the inventory turnover ratio?

1. Inventory turnover divides cost of goods sold by average inventory. 2. Find average inventory first: beginning inventory of $18,000 plus ending inventory of $15,000 equals $33,000. 3. Divide that sum by 2: $33,000 divided by 2 equals $16,500. 4. Now divide cost of goods sold by average inventory: $112,500 divided by $16,500 equals 6.82. 5. Rounded to one decimal place, inventory turns over 6.8 times a year. 6. Put another way, inventory is turned into sales about once every 54 days, since 365 divided by 6.8 is roughly 54. 7. Answering 7.5 times uses ending inventory alone rather than the average, and 3.4 times halves the answer by dividing by 2 twice. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.7 Analyzing Financial Statements_