Baker MIg Inc wehes lo compre its inventory hannover tothose ofindastry leaders,

Question

Baker MIg Inc wehes lo compre its inventory hannover tothose ofindastry leaders, who have turnover ofabout 13tmes per yer and g% of ther ases ?vestedinmert Baker Milg. Inc Net Revenue Cost of sales Inventory Total ansets $27,500 $20,390 $1,220 $16,380 a) What is Baker's ievenlory tanover?times pa year ground your renponse to two dlecimal placen) b) what its Baker's porcent of antets co mwnitled to inventory? % ender your msponse as @ percenlage roundod to Inc decmaf places c) How does Bakers performance compare to the industry leaders?

Explanation / Answer

Given :

Cost of Sales = $20,390

Inventory=$1220

Total Assets= $16,380

a) Inventory turnover= Cost of Sales/Inventory= 20390/1220= 16.71

b) % of assets committed to inventory=(Inventory/Total Assets) X 100= (1220/16380) X 100 = 7.45%

c) Baker's performance is better as compared to the industry leaders beacuse it has a higher inventory turnover of 16.71 as compared to turnover 13 of the industry leaders implying that the inventory is sold and replaced at a higher pace as compared to the industry leaders suggesting more efficient sales. Also a lower % of assets committed to inventory i.e. 7.45% as compared to the industry leaders (8%) suggests greater liquidity as compared to the leaders.

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.