Which of the Following Is the Correct Formula to Calculate

question 102

Multiple Choice

Which of the following is the correct formula to calculate inventory turnover?

• A) Inventory turnover = Cost of goods sold / Average merchandise inventory
• B) Inventory turnover = Cost of goods sold × Average merchandise inventory
• C) Inventory turnover = Cost of goods sold + Average merchandise inventory
• D) Inventory turnover = Cost of goods sold - Average merchandise inventory

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Definitions:

Retail Method

An inventory valuation method used by retailers that estimates inventory value by applying a cost to retail price ratio.

Estimated Cost

An approximation of the cost for goods or services, projected based on current information and past experience.

Retail Method

A pricing strategy used to estimate the value of a store's merchandise by considering the initial cost of inventory and its markup to retail price.

Cost To Retail Price

A pricing strategy where the selling price of an item is determined by adding a margin to its cost.