Question

A company has supplied the following data with respect to its three different types of fertilizers:

Fertilizer	Annual demand	Average Inventory	Cost per sack
	sacks	sacks	€
​ 10-10-10	45, 000	7,500	27
​ 16-16-16	30,000	4,500	22.5
​ 20-10-5	15,000	3,000	30

Note: The company has 50 sales weeks annually.

The inventory turnover for:

Fertilizer [10-10-10] ​(I​10-10-10​) is ( ) turns per year

Fertilizer [16-16-16] (I​16-16-16​) is nothing turns per year

Fertilizer [20-10-5] (I​20-10-5​) is nothing turns per year

​(Enter your response rounded to two decimal​ places.)

Answer 1

Fertilizer [10-10-10]
Cost of Goods Sold = 45000 x € 27 = € 1215000
Average Inventory = 7500 x € 27 = € 202500

Inventory Turnover = Cost of Goods Sold / Average Inventory
= € 1215000 / € 202500 = 6 turns or times

Fertilizer [16-16-16]
Cost of Goods Sold = 30000 x € 22.5 = € 675000
Average Inventory = 4500 x € 22.5 = € 101250

Inventory Turnover = Cost of Goods Sold / Average Inventory
= € 675000 / € 101250 = 6.67 turns or times

Fertilizer [20-10-5]
Cost of Goods Sold = 15000 x € 30 = € 450000
Average Inventory = 3000 x € 30 = € 90000

Inventory Turnover = Cost of Goods Sold / Average Inventory
= € 450000 / € 90000 = 5 turns or times