dollars in thousands End of Year projected of Year 582500 nv

(dollars in thousands) End of Year (projected) of Year 582,500 nventory $384,610 Current Year (projected) Cost of goods sold $7,283,566 5.00 points Required 1. Compute the inventory turnover ratio based on two different assumptions: (Round your answers to 1 decimal place.) a. Those presented in the above table (a decrease in the balance in inventory) b. No change from the beginning-of-the-year inventory balance. No Change Projected from Beginning Change of Year Inventory turnover ratio 12.5

Solution

Calculate inventory turnover ratio :

Inventory turnover ratio = Cost of goods sold/Average inventory

a) Those presented in the above table :

Average inventory = (582500+384610/2) = 483555

Inventory turnover = 7283566/483555 = 15.1 Times

b) No change from the beginning of the year inventory balance :

Inventory turnover = 7283566/582500 = 12.5 Times