28 November, 20:36

# Compute the inventory turnover ratio using the following information: Net sales is \$100,000 for the year, costs of goods sold are \$40,000, last year's assets in place were \$900,000, and this year's assets in place are \$1,100,000. Receivables for both years are \$50,000. Inventory changed from \$30,000 last year to \$10,000 this year.

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1. 28 November, 20:41
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Explanation:

The formula for calculating inventory turn over:

Costs of goods sold / average inventory

In this case:

Opening stock: \$ 30,000.00

Closing stock: \$ 10,000.00

Costs of goods sold : \$ 40,000.00

Average inventory = Opening stock + closing stock/2

= \$ 30,000 + \$ 10,000/2

=\$ 40,000/2

=\$ 20,00.00

Inventory turnover = \$ 40,000.00/\$20,000.00

=2
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