If beginning inventory at cost was $12,000.00, ending inventory at cost $10,4000.00, and the cost of goods sold $18,000.00, what was the inventory turnover ratio at cost? (Round to the nearest hundredth)
Inventory turnover is Cost of goods sold divided by the average merchandise inventory
First we should find the average merchandise inventory Add the inventory on hand at the start of the year to the inventory on hand at the end of the year and divide the result by 2 to find the company's average inventory (12,000+10,400)÷2=11,200
Now find the inventory turnover Divide the company's cost of goods sold for the year by the average inventory to figure the company's inventory turnovers per year. 18,000÷11,200=1.61.....answer
