If the average aggregate inventory value is $1,200,000 and the cost of goods sold is $600,000, which of the following is inventory turnover?


Multiple Choice

60


10.4


2


0.5


None of these

The formula for inventory turnover is:

\[
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold (COGS)}}{\text{Average Aggregate Inventory Value}}
\]

Given:
- Cost of Goods Sold (COGS) = $600,000
- Average Aggregate Inventory Value = $1,200,000

Now, applying the formula:

\[
\text{Inventory Turnover} = \frac{600,000}{1,200,000} = 0.5
\]

Thus, the correct answer is:

**0.5**

Would you like more details on inventory turnover or its significance?

Here are 5 relative questions for further exploration:
1. What is the significance of inventory turnover in business operations?
2. How does a high inventory turnover rate impact cash flow?
3. What are some strategies to improve inventory turnover?
4. How does inventory turnover affect supply chain management?
5. How does seasonal demand affect inventory turnover?

**Tip:** A low inventory turnover may indicate overstocking or inefficiencies, while a high one suggests efficient sales.

If the average aggregate inventory value is $1,200,000 and the cost of goods sold is $600,000, which of the following is inventory turnover?

Multiple Choice

60

10.4

2

0.5

None of these

Learn how to calculate inventory turnover using the formula: Inventory Turnover = Cost of Goods Sold / Average Aggregate Inventory Value. In this example, with a COGS of $600,000 and inventory value of $1,200,000, the result is 0.5. Understand how this key financial metric helps businesses evaluate the efficiency of inventory management.

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