Giorgio had cost of goods sold of $9,457 million, ending inventory of $2,125 million, and average inventory of $2,001 million. Its inventory turnover equals:Multiple Choice77.2 days.4.50.82.0 days.0.22.4.73.
Question
Giorgio had cost of goods sold of 2,125 million, and average inventory of $2,001 million. Its inventory turnover equals:Multiple Choice77.2 days.4.50.82.0 days.0.22.4.73.
Solution
The inventory turnover ratio is calculated by dividing the cost of goods sold (COGS) by the average inventory.
Here's how to calculate it:
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Identify the values needed for the calculation. In this case, Giorgio's COGS is 2,001 million.
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Divide the COGS by the average inventory.
Inventory Turnover = COGS / Average Inventory Inventory Turnover = 2,001 million = 4.73
So, the inventory turnover ratio is 4.73. This means that Giorgio's inventory turned over approximately 4.73 times during the period.
Therefore, the correct answer is 4.73.
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