The following information was available for Hoover Company at December 31, 2010: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $660,000; and sales $900,000. Hoover's inventory turnover ratio in 2010 was
A) 9.4 times.
B) 8.3 times.
C) 7.3 times.
D) 6.0 times.

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of Goods Sold / Average Inventory

To find the average inventory, we can use the formula:

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Plugging in the given values, we get:

Average Inventory = ($90,000 + $70,000) / 2 = $80,000

Now we can calculate the inventory turnover ratio:

Inventory turnover ratio = $660,000 / $80,000 = 8.25 times (rounded to one decimal place)

Therefore, the closest answer is B) 8.3 times.

The Following Information Was Available for Hoover Company at December