The inventory turnover formula is about dividing the cost of goods sold by the average inventory. In this case, we have to find the cost of goods sold is calculated as $50.
Inventory turnover suggests the rate at which an organization sells and replaces its inventory of products throughout a specific period. The stock turnover ratio method is the value of products offered divided via way of means of the average stock for the identical period.
As per the information, the Average inventory is $10
Inventory turnover ratio - 5 times
As per the formula of inventory turnover ratio,
[tex]\rm\,Inventory\, Turnover \,Ratio = \dfrac{Cost \, of \, Goods\, Sold }{Average\, Inventory}\\\\ \\ 5 = \dfrac{Cost \, of \, Goods\, Sold }{\$10}\\\\\\Cost \, of \, Goods\, Sold = \$50[/tex]
Hence, the cost of goods sold with the help of the inventory turnover ratio is equal to $50.
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