Question

Consider a firm with a 2013 net income of $20 million, revenue of $60 million, and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant, and equipment, how many weeks of supply does the firm hold?

Answer 1

Answer:

Weeks of supply = 4.16 weeks

Explanation:

given data

net income = $20 million

revenue = $60 million

cost of goods sold = $25 million

inventory = $2 million

property, plant, and equipment = $500,000

to find out

how many weeks of supply does the firm hold

solution

we know here that Weeks of supply will be express as

Weeks of supply = $\frac{average inventory}{cost of goods sold}$ × 52 weeks          ....................................1

so put here value we get weeks of supply

Weeks of supply =  $\frac{2}{25}$ × 52 weeks

Weeks of supply = 4.16 weeks