Assuming a 360 day year, calculate what the average investment in inventory woul

Question

Assuming a 360 day year, calculate what the average investment in inventory would be for a firm, given the following information in each case.

a. The firm has sales of $600,000, a gross profit margin of 10%, and an inventory turnover ratio of 6.

b. The firm has a cost-of-goods-sold figure of $480,000 and an average age of inventory of 40 days.

c. The firm has a cost-of-goods-sold figure of $1.15M and an inventory turnover rate of 5.

d. The firm has a sales figure of $25M, a gross profit margin of 14%, and an average age of inventory of 45 days.

Explanation / Answer

90,000 (600,000*.90)/6 52,603 (480,000/365)*40 230,000 (1,500,000)/5 2,650,685 (25,000,000)*.86/365 *45

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