Question

The newly opened Subway outlet on campus sells an average of 2000 6-inch sandwiches each week. The sandwich bread is supplied two times a week. On average, the store has 350 pieces of 1-foot bread in stock. Assume that each 1-foot bread costs $1.00.

Calculate the average inventory turnover and days of supply on hand for the sandwich bread at this outlet.

Answer 1

Inventory turnover ratio is nothing but the ratio that measures the number of times inventory is sold or used in a given time period and is calculated by dividing net sales by average inventory.

It measures how fast the company is able to sell its inventory, so low turnover means less sales and high ratio means strong sales. Inventory turnover ratio is an important component for calculating return on assets so if a company makes return on its assets then it signifies that it is selling its inventory more quickly at a profit.

d = 2000 unites /week 7 Aug inventory LT- 2 weets = 350 pieces cost = $1.00 - cost of good bold cast xd 8 1 X 2000 $ 2000 Aug. inventory twen over COGS Aug. inventory $ 2000 350 5.11 turns Auswer peste tot supply on hand = Aug. inventory x 52 weeks 365 days COGS 350 9 2000 x 52 365 63.875 63.9 days answer