Company XYZ has cost of goods sold at $3, 400,000, beginning inventory of $720,000 and ending inventory of $480,000. The industry inventory turnover average ratio is 8. The inventory turnover ratio of Company XYZ is ______ and is said to be ____ when compared to the industry inventory average ratio.

a) 7.99 and neutral

b) 7.08 and neutral

c) 5.67 and weak

d) 4.72 and strong

The answer is 6.67

Formula: cost of goods sold/average inventory/inventory= inventory turnover ratio

3,400,000/720,000= 4.72 (not sure which of these two are correct)

3,400,000/480,000=7.08 (not sure which of these two are correct)

If I use the formula above I do not arrive to the answer 6.67. What am I doing wrong?