The Tampa Manufacturing Company had the following financial data for December 31, the end of the current year: Cost of Goods Sold $500,000 Beginning Merchandise Inventory 55,000 Ending Merchandise Inventory 45,000 What is the inventory turnover for the year?

To calculate the inventory turnover rate, we need to understand what this rate indicates. The inventory turnover rate measures how many times a company's inventory is sold and replaced over a period, in this case, a year. The formula to calculate inventory turnover is as follows:

Inventory Turnover Rate = Cost of Goods Sold (COGS) / Average Inventory

The Average Inventory is calculated by adding the Beginning Inventory and the Ending Inventory, then dividing by 2. So, let's calculate it step by step.

Step 1: Calculate the Average Inventory. Average Inventory = (Beginning Merchandise Inventory + Ending Merchandise Inventory) / 2 Average Inventory = ($55,000 + $45,000) / 2 Average Inventory = $100,000 / 2 Average Inventory = $50,000

Step 2: Plug the Average Inventory into the formula to find the Inventory Turnover Rate. Inventory Turnover Rate = COGS / Average Inventory Inventory Turnover Rate = $500,000 / $50,000 Inventory Turnover Rate = 10

Therefore, the inventory turnover rate for Tampa Manufacturing Company for the year is 10. This means that the company sold and replaced its inventory 10 times during the year.