Asked by silvana cuadros salas on Jul 04, 2024
Verified
Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. The company's inventory turnover for Year 2 is closest to:
A) 5.92
B) 1.05
C) 6.07
D) 6.23
Inventory Turnover
A measure of how quickly a company sells and replaces its stock of goods in a given period.
Cost of Goods Sold
Expenditures directly connected to the creation of a company's sold products, encompassing materials and labor expenses.
Inventory
Inventory encompasses all the goods and materials that a business holds for the purpose of resale or as part of its raw materials for production.
- Analyze organizational effectiveness by scrutinizing inventory and accounts receivable turnover rates.
- Determine and explain the relevance of the inventory turnover rate, acknowledging its impact on enterprise functioning.
Verified Answer
Average inventory = (Ending inventory + Beginning inventory) / 2
Average inventory for Year 2 = (114,000 + 120,000) / 2 = $117,000
Inventory turnover for Year 2 = $710,000 / $117,000 = 6.07
Learning Objectives
- Analyze organizational effectiveness by scrutinizing inventory and accounts receivable turnover rates.
- Determine and explain the relevance of the inventory turnover rate, acknowledging its impact on enterprise functioning.
Related questions
Tool City,Inc Tool City Does Not Maintain Perpetual Inventory Records ...
A Company's Cost of Goods Sold Was $15,500 and Its ...
It Can Be Expected That Companies Selling Perishable Goods Have ...
True Blue Stores Had a Beginning Accounts Payable Balance of ...
Maraby Corporation's Accounts Receivable Turnover for Year 2 Was Closest ...