Respuesta :
Answer:
4.90
Explanation:
Given: Year 2 year 1
net sales: $652,000 $583,800
Cost of goods sold: $389,400 $360,930
Ending inventory $78,600 $80,280
We know, Inventory turnover= [tex]\frac{Cost\ of\ goods\ sold}{Average\ Inventory}[/tex]
First, lets find out the Average inventory.
Average inventory= [tex]\frac{78600+80280}{2}[/tex]
∴ Average inventory= [tex]\frac{158880}{2} = 79440[/tex]
Hence, Average inventory= is 79440.
Now, finding the inventory turnover for year 2.
Inventory turnover= [tex]\frac{389400}{79440}[/tex]
∴ Inventory turnover= 4.90
Hence, Inventory turnover for year 2 is 4.90
Answer:
The inventory turnover ratio for the Year 2 is 4.90
Explanation:
The formula to compute the inventory turnover ratio is as:
Inventory turnover ratio (ITR) = COGS (Cost of goods Sold) / Average Inventory
where
COGS amounts to $389,400
And the formula for computing the Average Inventory is as:
Average Inventory = Beginning Inventory + Ending Inventory / 2
where
Beginning inventory is $80,280
Ending inventory is $78,600
Putting the values above in the formula:
= $80,280 + $78,600 / 2
= $158,880 / 2
= $79,440
Now putting the values above in the inventory turnover ratio as
ITR = $389,400 / $79,440
= 4.90
