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Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?

Respuesta :

Answer:

12.5

Explanation:

Given: Cost of goods sold= $25 million.

           Amount of inventory= $2 million.

Now, finding inventory turnover.

Formula; Inventory turnover= [tex]\frac{Cost\ of\ goods\ sold}{Average\ inventory}[/tex]

⇒ Inventory turnover= [tex]\frac{\$ 25\ million}{\$ 2\ million}[/tex]

∴  Inventory turnover= [tex]12.5[/tex]

Hence, inventory turover is 12.5

   

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