Question

Padco averages $15 million worth of inventory in all of its worldwide locations. They operate 51 weeks a year and each week average $3 million in sales (at cost). Their inventory turnover is______________.
a.17 turns.
b. 5 turns.
c. 1.13 turns.
d. 10.2 turns.

Answer 1

Answer:

Option (d) is correct.

Explanation:

Given that,

Average inventory in all of its worldwide locations = $15 million

Operate in a year = 51 weeks

Weekly cost of goods sold = $3 million

Annual cost of goods sold:

= Weekly cost of goods sold × Number of weeks in a year

= $3 million × 51 weeks

= $153 million

Inventory turnover:

= Cost of goods sold ÷ Average inventory

= $153 million ÷ $15 million

= 10.2 turns