Question

Ivanhoe Inc. reported inventory at the beginning of the current year of $ 380000 and at the end of the current year of $ 431000. If net sales for the current year are $ 4529200 and the corresponding cost of sales totaled $ 3406200, what is the inventory turnover for the current year

Answer 1

The inventory turnover for the current year is 8.40 times

inventory turnover is defined as a business financial ratio that explains how many times  a company has made turnovers. ie  sold and replaced it goods in a year.

It is calculated as

inventory turnover=cost of goods sold/average inventory

But Average Inventory = ( beginning inventory + ending inventory ) /2  

                                         ( $380000 +  $431000)  / 2

                                       =$405,500

inventory turnover=$3,406,200/ $405,500

inventory turnover=8.40 times

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