Accounting question - how to calculate average inventory in the inventory turnover formula? HELP!?

Inventory Turnover = COGS/Average Inventory Average Inventory = [(Beginning Inventory+Ending Inventory) /2] Therefore: To compute COGS: Beginning Inventory $150000 Purchases 650000 Cost of Goods Available for Sale $800000 Ending Inventory 200000 Cost of Goods Sold $600000 To compute average inventory: average inventory = [(150000+200000)/2] = $175000 To compute the Inventory Turnover: =Inventory Turnover = COGS/Average Inventory =$600000/$175000 =3.42857 TIMES Meaning, you have circulated (sold and buy again) for 3.42857 TIMES your inventory during the year. For any accounting question, e - mail me at ejma_maverick@yahoo.co.  more