Based on the following data for the current year, what is the inventory turnover (rounded to one decimal place)?Sales on account during year$575,056Cost of goods sold during year202,401Accounts receivable, beginning of year47,751Accounts receivable, end of year51,613Inventory, beginning of year31,348Inventory, end of year44,744a.15.1b.4.3c.5.3d.20.4

Name: Based on the following data for the current year, what is the inventor
Uploaded: 2024-03-20T06:32:37.000Z
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Description: Based on the following data for the current year, what is the inventory turnover (rounded to one decimal place)?Sales on account during year$575,056Cost of goods sold during year202,401Accounts receivable, beginning of year47,751Accounts receivable,

Efficiency ratios are also known as activity ratios. It measures how well companies utilize their resources to generate income. Efficiency ratios mostly looks for the daily areas of business, like sales, inventory and accounts receivable. Efficiency ratios go hand in hand with profitability ratios. Mostly when company is efficient with its resources, it become profitable.Inventory turnover ratio:- The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is "turned" or sold during a period. This ratio is important because total turnover depends on two main components of performance, Purchases and Sales. This ratio shows how quickly a company can turn its inventory into sales. So higher the sales is better and so is true for this ratio. Inventory Turnover Ratio = $202,401/($31,348+$44,744)/2 Inventory Turnover Ratio = $202,401/$38,046 Inventory Turnover Ratio = 5.3199 Inventory turnover ratio is an efficiency ratio that measures how well a company can manage its inventory. It is important to achieve a high ratio, as higher turnover rates reduce storage and other holding costs. It is vital to compare the ratios between companies operating in the same industry and not for companies operating in different industries. The benchmark ratio varies greatly depending on the industry. Low turnover implies that a company’s sales are poor, it is carrying too much inventory, or experiencing poor inventory management. Unsold inventory can face significant risks from fluctuating market prices and obsolescence. Depending on the industry that the company operates in, inventory can help determine its liquidity. For example, inventory is one of the biggest assets that retailers report. If a retail company reports a low inventory turnover ratio, the inventory may be obsolete for the company, resulting in lost sales and additional holding costs.Hence, correct option is 'c' 5.3.

Answered: Based on the following data for the…

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Sales on account during year	$575,056
Cost of goods sold during year	202,401
Accounts receivable, beginning of year	47,751
Accounts receivable, end of year	51,613
Inventory, beginning of year	31,348
Inventory, end of year	44,744