A firm has $2,000,000 in net annual sales, its beginning inventory (for the year) was $400,000 (at retail), and its ending inventory was $600,000 (at retail). The firm's stock turnover rate for the year is ___ times.
A) 2.0
B) 3.3
C) 4.0
D) 5.0

Question

Quizplus · Accepted Answer

The stock turnover rate is calculated as Net Sales divided by Average Inventory. Average Inventory = (Beginning Inventory + Ending Inventory) / 2 = ($400,000 + $600,000) / 2 = $500,000. Stock Turnover Rate = $2,000,000 / $500,000 = 4.0 times.

A Firm Has $2,000,000 in Net Annual Sales, Its Beginning