Question

Maury's Motorcycle Shop has an average inventory of $289,900. What was the inventory turnover (to the nearest tenth) when annual sales were $1,395,870?3.64.14.85.7None of these choices are correct

Answer 1

Solution

Step 1

Deine terms and write an expression for the inventory turnover ratio

Annual sales = $1,395,870

Average inventory = $289,900

$\text{Inventory turnover ratio =}\frac{Anualsales(\cos t\text{ of goods sold)}}{\text{Average inventory}}$

Step 2

Calculate the inventory turnover ratio

$\begin{gathered} \text{Inventory turnover ratio =}\frac{1395870}{289900} \\ \text{Inventory turnover ratio = 4.82} \end{gathered}$

Therefore the inventory turnover ratio approximately = 4.8

Therefore, the correct option is option C (4.8)