Question

if costs of goods sold (cogs) are $180,000 and average inventory is $30,000, what is the inventory turnover ratio?
6
9
3

Explanation:

Step1: Recall the formula for inventory turnover ratio

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

Step2: Substitute the given values

We know that COGS is $\$180,000$ and average inventory is $\$30,000$. Substituting these values into the formula, we get $\text{Inventory Turnover Ratio} = \frac{180000}{30000}$.

Step3: Perform the division

Calculating $\frac{180000}{30000}$, we divide 180000 by 30000, which equals 6.

Answer:

6