Question

Lid On It hat shop has an inventory turn ratio of 6.2, $1.55 million in annual sales, and $620,000 cost of goods sold for the same annual period. What is its average inventory?a) $100,000b) $250,000c) $62,000d) $75,000

Answer 1

Average inventory will be $100000

So option (a) will be correct option

Step-by-step explanation:

We have given inventory turn ratio = 6.2

Cost of good sales = $620000

We have find the the average inventory

We know that inventory turn ratio is given by

Inventory turn ratio
`=(cost\ of\ goods\ sold)/(average\ inventory)`

So
`6.2=(620000)/(average\ inventory)`

Average inventory = $100000

So option (a) will be the correct option