A company that sells smartphones reported annual sales of $ 280,000 and inventor

Question

A company that sells smartphones reported annual sales of $ 280,000 and inventory of $92,000. Assuming that units in inventory are valued (based on cost of goods sold) at $600 per unit and are sold for $800 per unit, what is the company’s annual inventory turns?

A company that sells smartphones reported annual sales of $ 280,000 and inventory of $92,000. Assuming that units in inventory are valued (based on cost of goods sold) at $600 per unit and are sold for $800 per unit, what is the company’s annual inventory turns?

Explanation / Answer

First of all we will the cost of goods sold from the total sales

COGS = Cost / selling price * Sales

= 600 / 800 * 280000= $ 210,000

Inventory turn =COGS / Inventory

= $ 210000 / $ 92000

= 2.82

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