Question

The cost of goods sold of merpati sdn bhd is rm500,000. its average inventory level is rm100,000. the average inventory turnover for the industry is 10.

determine the inventory turnover.

Answer 1

The inventory turnover for Merpati Sdn Bhd is 5. This means that the company sells its entire inventory 5 times in a year.

Step-by-step explanation:

The inventory turnover ratio measures how quickly a company sells its inventory. It is calculated by dividing the cost of goods sold by the average inventory level. In this case, the cost of goods sold is RM500,000 and the average inventory level is RM100,000. To determine the inventory turnover, divide RM500,000 by RM100,000.

Inventory turnover = Cost of goods sold / Average inventory level

Inventory turnover = RM500,000 / RM100,000

The inventory turnover for Merpati Sdn Bhd is 5. This means that the company sells its entire inventory 5 times in a year.