15) Which metric is calculated with the following expression: (GM$ / Sales $) x (Sales $ / Avg. Inv.) ?
A) Inventory turnover
B) Gross margin return on inventory
C) Inventory velocity quotient
D) Value of average inventory
E) Inventory efficiency
Given expression :- (Gross margin (GM $) / Sales) $ X ( Sales $ X Average inventory
= Gross margin / Average inventory
= Gross margin to Average inventory
above the formula show the Gross margin returns on inventory . option ( B) is Correct .
Other explanations:-
Inventory turnover = Cost of good sold / average inventory
Inventory velocity quotient = time period from requistion of raw material to sale of finished good.
Value of average inventory =( opening inventory + closing inventory ) / 2
Inventory efficiency measured by inventory turnover ratio .
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