Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Inventory Turnover

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Multiple Choice

ABC Company had $200,000 in Net Sales and Gross Profit of $80,000. If Inventory had a balance of $60,000, what is the Inventory Turnover ratio?

1.33

2.00

3.33

Not enough information

Verified step by step guidance

Understand the formula for Inventory Turnover Ratio: Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory.

Identify the given values: Net Sales = $200,000, Gross Profit = $80,000, and Inventory = $60,000.

Calculate the Cost of Goods Sold (COGS) using the formula: COGS = Net Sales - Gross Profit. Substitute the given values to find COGS.

Assume that the Inventory balance given is the average inventory for simplicity, as no beginning or ending inventory values are provided.

Substitute the calculated COGS and the given Inventory balance into the Inventory Turnover Ratio formula to find the ratio.

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