Question

Nico Corporation has cost of goods sold of $300,000 and inventory of $30,000, then the inventory turnover is ________ and the average age of inventory is ________.
10; 36.536.5; 1030; 36.036.0; 10

Answer 1

Answer:

Invnetory TurnOver   10

Average inventory   36.5

Explanation:

$\frac{COGS}{Inventory} = TO Inventory$

300,000 / 30,000 = 10

The company sales his inventory 10 times per year

In some cases, we are given with a beginning and ending inventory.

For those, we calculate the average inventory:

(beginning + ending)/2

$\frac{365}{Inventory \: TO} = average age$

365/10 = 36.5

The average the inventory age is 36.5 days

365 are the days of the year, and the inventory Turnover are the times per year the inventory is being sold.

we divide one fro manother to get a metric in days of how much the invneotry is in store before being sold.