Question

Xyz company's annual sales for its products is 5000 units and its average inventory is 500 units.

a. compute the company's inventory turns.

Answer 1

Company's Annual sales = 5000

Average Inventory= 500

Required to find Company's Inventory Turnover ratio..

Inventory Turnover ratio = Cost of Goods Sold /Average Inventory

(if Cost of Goods Sold is not available..then sales should obviously be considered)

= 5000/500

=10

Inventory Turnover ratio= 10 times