Based on the fact that the vendor had a cost of goods sold of $8,000 and the average investment was $500, the value that was 16 was the Inventory Turnover.
The inventory turnover shows the number of times a company was able to buy new inventory in a period.
A higher inventory turnover means that the company is profitable because it means that they are selling their inventory fast enough.
The formula for inventory turnover is:
= Cost of goods sold / Average investment
= 8,000 / 500
= 16
In conclusion, this is the inventory turnover.
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