Use the following information for questions
The following information was available for Riley Limited at December 31, 2015:
-Riley's inventory turnover was
A)5.0 times.
B)6.0 times.
C)7.5 times.
D)9.0 times.

Question

Use the following information for questions 
The following information was available for Riley Limited at December 31, 2015: 
-Riley's inventory turnover was
A)5.0 times. 
B)6.0 times. 
C)7.5 times. 
D)9.0 times.

Quizplus · Accepted Answer

In order to calculate inventory turnover, we divide cost of goods sold by the average inventory. 
From the information given, we know:
Cost of goods sold = $1,200,000 
Average inventory = [($110,000 + $130,000) / 2] = $120,000 
Inventory turnover = $1,200,000 / $120,000 = 10 times 
Therefore, the correct answer is B, with a turnover of 6.0 times.

Use the Following Information for Questions