Question

A manufacturing company has annual sales of $180,000 and inventory of $40,000. The inventory turnover ratio for the company is __________.

Answer 1

Answer:

4.5

Explanation:

Inventory refers to the goods that a company has in its stock. Inventory includes raw materials and finished goods sold by the company.

Inventory turnover refers to the number of times a company sells and replaces its inventory during a given period.

Annual sales of a manufacturing company $=\ 180,000$

Inventory $=\ 40,000$

Inventory turnover ratio for the company = Sales/Inventory

$=\frac{180,000}{40,000} =4.5$