Question

15) Which metric is calculated with the following expression: (GM$ / Sales $) x (Sales $...

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

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Homework Answers

Answer #1

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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