The following information is taken from the financial statement of Mark\'s Bike
ID: 2703107 • Letter: T
Question
The following information is taken from the financial statement of Mark's Bike Shop:
Total Current Assets $48,000
Property, equipment $5,000
Current liabilities $12,000
Long Term Liabilities $3,000
Owner's Equity $38,000
Beginning Inventory $40,000
Ending Inventory $32,000
Cost of Goods Sold $125,000
Net Income $40,000
The inventory turnover of Mark's Bike Shop is:
A) 3.5
B)4.6
C)5
*Please give steps to your answer.
Explanation / Answer
Inventory turnover = Cost of Goods Sold / Average Inventory
125,000/(40,000+32,000)/2 = 3.47 = 3.5
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