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The Home Furnishings Store had net credit sales of $7,500,000 and cost of goods sold of $4,500,000 for the year. The average inventory for the year amounted to $1,500,000.
-The inventory turnover ratio for the year is
A) 5 times.
B) 7.5 times.
C) 3 times.
D) 1.67 times.

Question

Use the following information for questions 
The Home Furnishings Store had net credit sales of $7,500,000 and cost of goods sold of $4,500,000 for the year. The average inventory for the year amounted to $1,500,000.
-The inventory turnover ratio for the year is
A) 5 times.
B) 7.5 times.
C) 3 times.
D) 1.67 times.

Quizplus · Accepted Answer

The inventory turnover ratio is calculated as Cost of Goods Sold divided by Average Inventory. Here, it is $4,500,000 / $1,500,000 = 3 times.

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