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Problem:

Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case.

a. The firm has sales of $600,000, a gross profit margin of 10 percent, and an inventory turnover ratio of 6.

b. The firm has a cost-of-goods-sold figure of $480,000 and an average age of inventory of 40 days.

c. The firm has a cost-of-goods-sold figure of $1.15 million and an inventory turnover rate of 5.

d. The firm has a sales figure of $25 million, a gross profit margin of 14 percent, and an average age of inventory of 45 days.

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169215

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