Anderson Farms Company provided the following for? 2018: Cost of Goods Sold? (Co
ID: 2508347 • Letter: A
Question
Anderson Farms Company provided the following for? 2018:
Cost of Goods Sold? (Cost of? sales)
$1,000,000
Beginning Merchandise Inventory
325,000
Ending Merchandise Inventory
630,000
Calculate the? company's inventory turnover ratio for the year.? (Round your answer to two decimal? places.)
A. 2.09times per year
B.1.59 times per year
C. 3.08 times per year
D.1.05 times per year
Cost of Goods Sold? (Cost of? sales)
$1,000,000
Beginning Merchandise Inventory
325,000
Ending Merchandise Inventory
630,000
Explanation / Answer
Average Inventory
= (Beginning Merchandise Inventory + Ending Merchandise Inventory) / 2
= ($325,000 + $ 630,000) / 2
= $ 477,500
So, Inventory turnover ratio
= Cost of Goods Sold / Average Inventory
= $1,000,000 / $ 477,500
= 2.09 times
So, as per above calculations, option A is the correct option