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Universal Sports Supply began the year with an inventory balance of $65.000 and a year-end balance of $75,000. Sales of $750,

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Answer #1

Inventory turnover ratio can be calculated as:

Inventory turnover ratio=Cost of goods sold/Average inventory

Inventory turnover ratio Universal sports supply cost of goods sold / Average inventory = Inventory turnover ratio $500,000/

Thus, inventory turnover ratio is 7.1 times.

Working note:

Cost of goods sold=Sales-Gross profit

Cost of goods sold=$750,000-$250,000

Cost of goods sold=$500,000

Average inventory=(opening inventory+closing inventory)/2

Average inventory=($65,000+$75,000)/2

Average inventory=$70,000

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