Answer:
The formula for inventory turnover ratio is
Cost of goods sold/ Average inventory. So we can put numbers in the formula and find the cost of good sold for the company.
Inventory turnover ratio= cost of goods sold/Average Inventory
3= cost of goods sold/ 156,000
156,000*3= cost of goods sold
Cost of goods sold = 468,000
Now to find out what the average inventory needs to be for the inventory turnover ratio to be 6 and cost of goods sold to be 468,000 we will put these 2 numbers in the formula in order to find the average inventory.
6= 468,000/Average Inventory
Average Inventory = 468,000/6= 78,000
She would need average inventory levels of $78,000 to generate the same level of sales and have an inventory turnover ratio of 6.
Explanation:
