Use the information below to compute the inventory turnover. (The same company a

Question

Use the information below to compute the inventory turnover. (The same company and numbers are used for questions 19 -22)

SHARKEY CORPORATION
Selected Financial Data As of December 31,
.... ....................................................2007.......... 2006
Cash                                                   $ 8,000      $ 60,000
Marketable securities                           32,000           8,000
Accounts receivable                             40,000 110,000
Inventory                                             80,000       140,000
Net property, plant, and equipment    240,000        280,000
Accounts payable                                60,000 100,000
Short- term notes payable                    30,000 50,000
Credit sales                                        600,000 900,000
Cost of goods sold                          1,260,000    1,403,000

a: 11.45 times

b: 10.5 times

c: 9.85 times

d: 8.45 times

Explanation / Answer

Answer:

Inventory turnover Ratio = Cost of goods sold / Average Inventory

12600000/ [(80000+140000)/2] = 11.45 Times

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