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31 May, 09:07

Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 12.50 B) 10.00 C) 42.00 D) 4.16 E) 20.00

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  1. 31 May, 09:31
    0
    12.50 times

    Explanation:

    Inventory Turnover = Cost of Sales / Inventory

    = $25,000,000 / $2,000,000

    = 12.50 times
  2. 31 May, 12:21
    0
    A) 12.50

    Explanation:

    Inventory turnover is the ratio that how many time a business has sold or replaced the inventory during a given period. A business is considered more profitable if it has high inventory turnover.

    Inventory turnover = Cost of Goods Sold / Inventory value

    Inventory Turnover = $25,000,000 / $2,000,000

    Inventory Turnover = 12.50 times

    The firm can can sell 12.5 times the same value of inventory i a year.
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