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Answer: 6.7
**Explanation:** Under IFRS, inventories must be measured at the lower of cost and net realizable value. For Year 1, the inventory value is €80 million (lower of €90 million and €80 million), and for Year 2, it is €100 million (lower of €100 million and €120 million). The inventory turnover ratio is calculated as: \[ \text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}} \] For Year 2: \[ \text{Average Inventory} = \frac{100 + 80}{2} = 90 \] \[ \text{Inventory Turnover} = \frac{600}{90} \approx 6.7 \] Thus, the correct answer is **C** (6.7). This aligns with the requirement to measure inventory at the lower of cost and net realizable value, impacting financial ratios and statements.
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An analyst collects the following data (in € millions) for an automobile manufacturer's inventory: Year 2 Year 1 Cost of goods sold 600 700 Cost of inventory 100 90 Net realizable value of inventory 120 80 The inventory turnover ratio (using average inventory) for Year 2 is closest to:
A
6.0
B
6.3
C
6.7
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