ion apparel reported $100 000 000 in revenues over the last year. On average, over the same year the company had $5 000 000 worth of inventory in their warehouses. Assume that units in inventory are valued based on cost of goods sold (COGS) and that the retailer has a 100% markup on all products. a) How many times each year does the retailer turn its inventory. The company uses a 40% per year cost of inventory. That is for the hypothetical case that on
The task I am struggling with:
A large catalog retailer of fashion apparel reported $100 000 000 in
revenues over the last year. On average, over the same year the company had $5 000 000 worth of inventory in their warehouses. Assume that units in inventory are valued based on cost of goods sold (COGS) and that the retailer has a 100% markup on all products.
a) How many times each year does the retailer turn its inventory. The company uses a 40% per year cost of inventory. That is for the hypothetical case that one item of $100 COGS would sit exactly one year in inventory, the company charges itself a $40 inventory cost.
b) What is the inventory cost for a $30 (COGS) item? You may assume that inventory turns are independent of the price.
Thank you very much for your help.
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