The 2007 financial statements of Wert Company reported a beginning inventory of $80,000, an ending inventory of $120,000, and cost of goods sold of $600,000 for the year.Wert's inventory turnover ratio for 2007 is
A)7.5 times.
B)6.0 times.
C)5.0 times.
D)4.3 times.

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold / Average inventory
Average inventory = (Beginning Inventory + Ending Inventory) / 2
Average inventory = ($80,000 + $120,000) / 2 = $100,000
Inventory turnover ratio = $600,000 / $100,000 = 6 times. Therefore, the answer is B.

The 2007 Financial Statements of Wert Company Reported a Beginning