Question

Calculate the inventory turnover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 19.2 times, is the company managing its inventory more or less efficiently than other companies in the same industry

Answer 1

Answer:

The numbers are missing, so I looked for a similar question and found the attached images.

inventory turnover ratio = cost of goods sold / average inventory

cost of goods sold = $437,000

initial inventory = $30,000

ending inventory = $448,500 - $437,000 = $11,500

inventory turnover ratio = $437,000 / [($30,000 + $11,500)/2] = 21.06

The inventory turnover ratio shows use how fast a company sells its inventory, so the higher, the better. If the company's turnover ratio is higher than the industry's average, it means that it is more efficient at selling its inventory.