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Based on the values reported in the table below, what is the inventory turnover?
Suggested Answer: C
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Inventory turnover is a ratio that measures how many times a company sells and replaces its inventory in a given period. It is calculated by dividing the cost of goods sold (COGS) by the average inventory value. A higher inventory turnover indicates a more efficient use of inventory, while a lower turnover implies excess inventory or poor sales1.
Based on the values reported in the table, we can calculate the inventory turnover as follows:
Inventory Turnover = COGS / Average Inventory Value = $260,000 / $150,000 = 1.73
Therefore, the correct answer is C.
14 comments · newest first
AN
Anika
10 months ago
Wait, are we sure about these numbers?
SH
Sheridan
10 months ago
Just did the math, and 0.58 seems off.
LI
Lindy
10 months ago
I think it's definitely around 2.60.
LO
Louisa
10 months ago
No way, it's gotta be 1.73!
SO
Socorro
10 months ago
0.50 seems way too low for turnover.
SO
Sol
11 months ago
I practiced a similar question last week, and I think the answer was around 1.7, so I’m leaning towards C.
RO
Rosendo
11 months ago
I feel like I might be mixing up the values from the table. Was the average inventory higher or lower than the cost of goods sold?
VI
Vincenza
11 months ago
I remember a practice question where we had to find the turnover ratio, and I think it was around 2.5, so maybe D is close?
CR
Craig
11 months ago
I think inventory turnover is calculated by dividing the cost of goods sold by the average inventory, but I'm not entirely sure about the exact formula.
TA
Tasia
12 months ago
I've got this! The inventory turnover is the cost of goods sold divided by the average inventory. Based on the values in the table, the answer is C - 1.73.
DA
Danica
12 months ago
Wait, what's the difference between cost of goods sold and average inventory? I'm a little confused on the concepts here.
GO
Goldie
12 months ago
I think I know how to do this. The inventory turnover is the cost of goods sold divided by the average inventory. I just need to find those values in the table and plug them in.
JU
Julianna
1 year ago
Hmm, I'm not sure how to calculate the inventory turnover from this information. I'll need to review the formula and think it through.
VI
Viva
1 year ago
Okay, this looks straightforward. I just need to find the inventory turnover ratio based on the values in the table.