Question

In 2013, Firm ABC’s annual inventory turns were 5.7, and its Cost of Goods Sold (COGS)...

In 2013, Firm ABC’s annual inventory turns were 5.7, and its Cost of Goods Sold (COGS) was $ 309 million. What is the average inventory it holds in $ million during 2013? Round your answer to the nearest integer. For example, if your answer is $201.32 million or $201,320,000, input 201.

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Answer #1

Inventory turnover ratio is an important measure which tells us about how well a company generates sales from its inventory.

Annual Inventory turnover = 5.7

Cost of goods sold(COGS) = $309 million

Average inventory = ?

Inventory turnover ratio = COGS / Average inventory

5.7 = 309 / Avg inventory

Avg Inventory = 309 million / 5.7 = $54,210,526.31 or $54 million

Hence average inventory is $54 million.

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