14 Big Four Lumber store has an average finishedgoods invent

14. Big Four Lumber store has an average finished-goods inventory of $36,318 million. If Big Four cost of goods sold is $307, 646 million/year, what is its annual inventory turmover?

Solution

Annual inventory turnover can be defined as:

Inventory Turnover = Net Sales/ Average Inventory

Or

Inventory Turnover = Goods sold cost / Average Inventory

The inventory turnover signifies many things and those are:

In given case;

Goods sold/ year: USD 307,646 million

Avg. finished goods inventory: USD 36,318 million

Therefore, as per the formula

Inventory turnover = Cost of goods sold/ avg. inventory

Inventory turnover = 307646/36318

Inventory turnover = 8.47

Annual inventory turnover can be defined as:

Inventory Turnover = Net Sales/ Average Inventory

Or

Inventory Turnover = Goods sold cost / Average Inventory

The inventory turnover signifies many things and those are:

In given case;

Goods sold/ year: USD 307,646 million

Avg. finished goods inventory: USD 36,318 million

Therefore, as per the formula

Inventory turnover = Cost of goods sold/ avg. inventory

Inventory turnover = 307646/36318

Inventory turnover = 8.47