11. goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and…

11. goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and the cost of goods sold is $50,000. what is the inventory turnover?

11. goods available for sale are $40,000; beginning inventory is $16,000; ending inventory is $20,000; and the cost of goods sold is $50,000. what is the inventory turnover?

Answer

Explanation:

Step1: Calculate average inventory

Average inventory = $\frac{Beginning\ inventory + Ending\ inventory}{2}$ Average inventory = $\frac{16000 + 20000}{2}=\frac{36000}{2}=18000$

Step2: Calculate inventory turnover

Inventory turnover = $\frac{Cost\ of\ goods\ sold}{Average\ inventory}$ Inventory turnover = $\frac{50000}{18000}\approx2.78$

Answer:

2.78