Question

The grocery industry has an annual inventory turnover of about 14 times. Organic​ Grocers, Inc., had a cost of goods sold last year of ​$11 comma 190 comma 000​; its average inventory was ​$1 comma 012 comma 820. What was Organic​ Grocers' inventory​ turnover, and how does that performance compare with that of the​ industry? ​a) What was Organic​ Grocers' inventory​ turnover? nothing times per year ​(round your response to two decimal​ places). ​b) How does Organic​ Grocers' performance compare with that of the​ industry? It is ▼ worse than the same as better than the industry.

Answer 1

Organic Grocers' inventory turnover is 11.04 times per year, which is worse than the industry's average of about 14 times per year.

Step-by-step explanation:

a) What was Organic​ Grocers' inventory​ turnover?

To calculate Organic Grocers' inventory turnover, we divide the cost of goods sold by the average inventory:

Inventory turnover = Cost of Goods Sold / Average Inventory

Inventory turnover = $11,190,000 / $1,012,820 = 11.04 times per year (rounded to two decimal places).

b) How does Organic​ Grocers' performance compare with that of the​ industry?

Since the grocery industry has an annual inventory turnover of about 14 times and Organic Grocers' inventory turnover is 11.04 times per year, it is worse than the industry.