If the annual cost of goods sold is $30,000,000 and the average inventory is$5,000,000,a. What is the inventory turns ratio?b. What would be the reduction in average inventory if, through better materialsmanagement, inventory turns were increased to 10 times per year?c. If the cost of carrying inventory is 25% of the average inventory, what is the annual savings?
If the annual cost of goods sold is $30,000,000 and the average inventory is$5,000,000,a. What is the inventory turns ratio?b. What would be the reduction in average inventory if, through better materialsmanagement, inventory turns were increased to 10 times per year?c. If the cost of carrying inventory is 25% of the average inventory, what is the annual savings?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If the annual cost of goods sold is $30,000,000 and the average inventory is
$5,000,000,
a. What is the inventory turns ratio?
b. What would be the reduction in average inventory if, through better materials
management, inventory turns were increased to 10 times per year?
c. If the cost of carrying inventory is 25% of the average inventory, what is the annual savings?
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