The following balance sheet information is provided for Gaynor Company: $\begin{array}{lrr}
\text { Assets } & \text { Year 2 } & \text { Year 1 } \
\text { Cash } & \$ 4,250 & \$ 3,500 \
\text { Accounts receivable } & 17,000 & 15,000 \
\text { Inventory } & \$ 44,500 & \$ 52,000
\end{array}$ Assuming Year 2 cost of goods sold is $130,000, what is the company's inventory turnover?
A) 2.50 times
B) 2.69 times
C) 2.92 times
D) None of the these answers are correct.

Question

Quizplus · Accepted Answer

The inventory turnover is calculated as Cost of Goods Sold divided by the average inventory. Average inventory = (44,500 + 52,000) / 2 = 48,250. Inventory turnover = 130,000 / 48,250 = 2.69 times.

The Following Balance Sheet Information Is Provided for Gaynor Company