Question

inventory turnover
use the information below to answer the question
fictitious business corporation income statement
for the year ended december 31, 2025
(all amounts in uso)
gross revenue $1,150,000
cost of goods sold $450,000
gross profit $700,000
operating expenses
salaries and wages $200,000
rent expense $60,000
utilities expense $30,000
depreciation expense $40,000
marketing expense $50,000
total operating expenses $380,000
operating income $320,000
other income and expenses
interest expense $15,000
investment income $5,000
net other income (expenses) ($10,000)
net income before taxes $310,000
income tax expense (20%) $62,000
net income $248,000
what is the inventory turnover ratio for fictitious business company if its average inventory is $50,000?
7
9
11

Explanation:

Step1: Recall the formula for inventory turnover

The formula for inventory turnover ratio is $\text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}$.

Step2: Identify the values

From the income statement, the Cost of Goods Sold is $\$450,000$, and the average inventory is given as $\$50,000$.

Step3: Calculate the ratio

Substitute the values into the formula: $\frac{450000}{50000} = 9$.

Answer:

9