Using the information provided, what is the inventory turnover for the firm Perf

Question

Using the information provided, what is the inventory turnover for the firm

        Perfect Purchase Electronics

Selected Income Statement Items, 2014

Cash Sales                         $1,500,000

Credit Sales                      $7,500,000

Total Sales                        $9,000,000

COGS                                 $6,000,000

Selected Balance Sheet Accounts

                                     12/31/2014   12/31/2013 Change

Accounts Receivable      $270,000       $240,000     $30,000

Inventory                       $125,000       $100,000     $25,000

Accounts Payable           $110,000         $90,000     $20,000

Explanation / Answer

Answer: Inventory turnover Ratio=Net cost of goods sold/Average Inventory

=$6,000,000/[($125000+$100000)/2]

=$6,000,000/112500

=53.33 times

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