Question

Inventory Ratio Calculations
Delroi, Inc. provided the following data for 2008 and 2009:

Inventory
December 31, 2007 $201,000
December 31, 2008 191,100
December 31, 2009 182,600
Cost of goods sold
2008 $632,000
2009 731,000
Gross margin
2008 $320,000
2009 440,000

Calculate the inventory turnover ratio for 2008 and 2009.

Answer 1

Answer:

Inventory Turnover Ratio for 2008=  3.223 Times

Inventory Turnover Ratio for 2009= 3.91 times

Explanation:

Inventory Turnover Ratio=  Cost of Goods Sold / Average Inventories

Inventory Turnover Ratio for 2008=  $632,000/ $201,000 + 191,100/2

Inventory Turnover Ratio for 2008=  $632,000/196,050

Inventory Turnover Ratio for 2008=  3.223  times

Inventory Turnover Ratio for 2009=  $ 731,000/191,100 + 182,600/2

Inventory Turnover Ratio for 2009=  $ 731,000/ 186,850

Inventory Turnover Ratio for 2009= 3.91 times