Question Regarding Inventory Turnover and Accts Receicables Turnover
Shouldn’t turnover ratios be calculated using AVG balance sheet items (eg inventory, accts receivables) instead of ending balance values?
I may be wrong, but there seems to be a mistake in the CFAI practice problems.
If I’m not mistaken, shouldn’t Receivables Turnover = Sales/(avg accounts receivables)
and shouldn’t Inventory Turnover = COGS/(avg inventory balance)
so why is CFA not using AVG values and using the ending values in these pictures?
1 link is the question, another link is the answer.
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