Practice Quiz

FPGEE Foreign Pharmacy

Category - Social & Administrative

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PharmaPlus Pharmacy sold $600,000 worth of goods last year, with a beginning inventory of $120,000 and an ending inventory of $100,000. Calculate the inventory turnover rate.
  1. 4.54
  2. 5.45
  3. 5.95
  4. 2.72
Explanation
Answer: B - The inventory turnover rate is 5.45. To calculate turnover rate, you must divide the cost of goods sold by the average of the beginning and ending inventory. In this example, you would divide 600,000 by 110,000 (which is 120,000+100,000 divided by 2). This results in an answer of 5.45.
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