Exercise 13-4A (Algo) Inventory turnover LO 13-2Selected financial information for Zachary Company for Year 4 follows: Sales$1,750,000 Cost of goods sold 1,225,000 Merchandise inventory Beginning of year 155,000 End of year 190,000 RequiredAssuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during Year 4? (Round your answer to 2 decimal places.)

Ratio analysis is a method of measuring the financial position of the organization with different kinds of ratios such as liquidity ratio, profitability ratio, solvency ratio. These ratios help to compare two or more financial statements.Inventory turnover = Cost of goods sold / Average inventory Average inventory = (Beginning inventory + Ending inventory) / 2 = ( 155,000 + 190,000 ) / 2 = 172,500 Inventory turnover = 1225,000 / 172,500 = 7.101 or 7.10 The correct answer is 7.10 times

Answered: Selected financial information for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 13-4A (Algo) Inventory turnover LO 13-2

Selected financial information for Zachary Company for Year 4 follows:


Sales	$	1,750,000
Cost of goods sold		1,225,000
Merchandise inventory
Beginning of year		155,000
End of year		190,000

Required
Assuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during Year 4? (Round your answer to 2 decimal places.)

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