Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 17

Sticky Fingers Inc. produces scotch tape and masking tape. Last year’s annual report has been compiled, and you are in charge of business analysis for the year. The company had a goal for inventory turnover of 6, cost of goods sold of $400,000, beginning inventory of $50,000, and ending inventory of $70,000. What was the actual inventory turnover, and at what percent did the firm achieve its goal?

Step 1 of 5

Inventory Turnover Ratio

It is also known as stock turnover ratio. It measured the number of times inventory is being sold or consumed in the given period of time. It is calculated by divided the cost of goods sold to the average inventory and the average inventory is the sum total of opening inventory and the closing inventory and divide by two.