Use the following information for Shafer Company to compute inventory turnover for year 2.

Year 2 Year 1

Net sales $651,500 $583,700

Cost of goods sold 389,300 360,920

Ending inventory 78,500 80,180

a. 8.28

b. 4.89

c. 4.04

d. 7.25

e. 5.89

The correct answer is B.

Explanation:

Giving the following information:

Year 2 Year 1

Net sales $651,500 $583,700

Cost of goods sold 389,300 360,920

Ending inventory 78,500 80,180

To calculate the inventory turnover, we need to use the following formula:

Inventory turnover = Cost of goods sold / average inventory

Average inventory = (beginning inventory + ending inventory) / 2

Average inventory = 158,680/2 = 79,340

Inventory turnover = 389,300/79,340

Inventory turnover = 4.91