Chapter 11, Problem 5P

Question:

•• 11.5 Baker Mfg. Inc. (see Table 11.9) wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory.

TABLE 11.9 For Problems 11.5 and 11.6

ARROW DISTRIBUTING CORP.
Net revenue	$16,500
Cost of sales	$13,500
Inventory	$1,000
Total assets	$8,600
BAKER MFG. INC.
Net revenue	$27,500
Cost of sales	$21,500
Inventory	$1,250
Total assets	$16,600

1. a. What is Baker’s inventory turnover?
2. b. What is Baker’s percent of assets committed to inventory?
3. c. How does Baker’s performance compare to the industry leaders?