The cost of sales for a company is $400,000 and its net sales are $800,000. What would its stockturn rate be if its average inventory at cost is $100,000?
A) 3
B) 2
C) 1
D) 8
E) 4

Question

Quizplus · Accepted Answer

Stockturn rate = Cost of Sales / Average Inventory at Cost

Cost of Sales = $400,000
Net Sales = $800,000

We can find the Cost of Goods Sold (COGS) by subtracting the Cost of Sales from Net Sales:

COGS = Net Sales - Cost of Sales
COGS = $800,000 - $400,000
COGS = $400,000

Average Inventory at Cost = $100,000

Stockturn rate = COGS / Average Inventory at Cost
Stockturn rate = $400,000 / $100,000
Stockturn rate = 4

Therefore, the answer is E) 4.

The Cost of Sales for a Company Is $400,000 and Its