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Assignment 1) Inventory Turnover Month Inventory Cost of Goods Sold January 1550000 1225000 February 1850000 2150000...

Assignment

1) Inventory Turnover

Month Inventory Cost of Goods Sold

January 1550000 1225000

February 1850000 2150000

March 1300000 1550000

April 1400000 975000

May 2000000 1350000

June 1650000 1550000

July 1250000 1100000

August 1400000 1150000

September 1700000 1700000

October 1800000 1350000

November 1200000 1400000

December 900000 1000000

Inventory Turnover= (Cost of Goods Sold)/(Average Inventory)

For this problem, we use an average monthly inventory and compare that with the total Cost of Goods Sold.

Inventory turnover =

business   Operations-Management   
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Answer #1

Inventory turnover ratio is nothing but the ratio that measures the number of times inventory is sold or used in a given time period and is calculated by dividing net sales by average inventory.

It measures how fast the company is able to sell its inventory, so low turnover means less sales and high ratio means strong sales. Inventory turnover ratio is an important component for calculating return on assets so if a company makes return on its assets then it signifies that it is selling its inventory more quickly at a profit.

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