Suppose maestro's had cost of goods sold during the year of $ 230 comma 000. Beginning merchandise inventory was $ 35 comma 000, and ending merchandise inventory was $ 45 comma 000. Determine maestro's inventory turnover for the year. Round to the nearest hundredth.
Answers
ANSWER:
Inventory turnover ratio : =5.75
Inventory turnover period : =63 days
1. Add beginning and ending inventory
Beginning merchandise inventory $ 35 000
Add: Ending merchandise inventory $ 45 000.
Total $ 80 000
2.Get the average by dividing the sum by 2.
Average inventory = $ 80 000/2 = $40 000
3.Divide the cost of good sold by average inventory.
Turn over ratio
=Cost of Goods sold/Average inventory
=$ 230 000/ $40 000
=5.75
4. Divide 365 days by the turnover ratio.
Turn over period
=365 days/ 5.75
=63 days
The question is to be solved and the correct answer for the question will be Stock turnover = cost of products sold/normal stock
Stock turnover = 230,000/40,000
*Inventory turnover = 5.75 times each year.
This is the way how the question can be solved and this is the write answer for the question.
The question can be solved in other ways but this way is easy and accurate and that is how it can be solved easily.