Question

Zhang company reported cost of goods sold of $835,000 and average inventory of $41,750. the inventory turnover ratio is

Answer 1

To find the inventory turnover ratio you will:
divide the cost of goods sold (COGS) by the average inventory
COGS = $835,000
Average inventory = $41,750

Inventory turnover ratio = $835,000/$41,750 
Inventory turnover ratio = 20
In most cases, we can assume if there is a higher ratio more sales are being generated from the inventory.