ZuoTi.Pro
Question

A manufacturer of GPS systems has an annual cost of goods sold of $7 million a...

A manufacturer of GPS systems has an annual cost of goods sold of $7 million a year and an average inventory of $4.9 million. The GPS navigation systems manufacturer has hired a consultant to help them increase their inventory turns. They claim that by implementing a new IT system for managing their inventory, the GPS systems company will be able to increase its inventory turns to 4 times per year. What would be the average amount of inventory (in million $) with the new IT system implemented? Choose the answer closest to the correct answer. Select one: a. 0.25 b. 0.57 c. 1.75 d. 2.33 e. 19.6

business   Operations-Management   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory

=> Inventory Turnover = 7/4.9 = 1.429

New Inventory Turnover = 4

=> COGS/Average Inventory = 4

=> Average Inventory = 7/4 = 1.75

Hence, (c) is the correct option

0 0
Add a comment
Know the answer?
Add Answer to:
A manufacturer of GPS systems has an annual cost of goods sold of $7 million a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Sun Magic Corp. consistently sells $60 million of product sales (with a cost of goods sold...

    Sun Magic Corp. consistently sells $60 million of product sales (with a cost of goods sold of $40 million) each year. Sun's inventory ratio has been 4.0 for the past few years. A new VP of Operations believes that a new inventory control system will increase inventory turnover to 6.0 without impacting sales. If the new VP is correct, how much working capital will be freed up? a. It cannot be determined from the information provided. b. $2.0 million c....

  • Williams & Sons last year reported sales of $23 million, cost of goods sold (COGS) of...

    Williams & Sons last year reported sales of $23 million, cost of goods sold (COGS) of $18 and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up?

  • Williams & Sons last year reported sales of $108 million, cost of goods sold (COGS) of...

    Williams & Sons last year reported sales of $108 million, cost of goods sold (COGS) of $90 and an inventory turnover ratio of 5. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the...

  • Williams & Sons last year reported sales of $16 million, cost of goods sold (COGS) of...

    Williams & Sons last year reported sales of $16 million, cost of goods sold (COGS) of $12 and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer to the...

  • Inventory Management Williams & Sons last year reported sales of $44 million, cost of goods sold...

    Inventory Management Williams & Sons last year reported sales of $44 million, cost of goods sold (COGS) of $36 and an inventory turnover ratio of 4. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer...

  • Cold Chiller Corporation (CCC) has annual sales of $10 million, cost of goods sold of 60...

    Cold Chiller Corporation (CCC) has annual sales of $10 million, cost of goods sold of 60 percent, average age of inventory of 80 days, average collection period of 35 days, average payment period of 30 days, and purchases that are 60 percent of cost of goods sold. How much does CCC have invested in its cash conversion cycle assuming a 365-day year?

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

  • How can we assess whether a project is a success or a failure? This case presents...

    How can we assess whether a project is a success or a failure? This case presents two phases of a large business transformation project involving the implementation of an ERP system with the aim of creating an integrated company. The case illustrates some of the challenges associated with integration. It also presents the obstacles facing companies that undertake projects involving large information technology projects. Bombardier and Its Environment Joseph-Armand Bombardier was 15 years old when he built his first snowmobile...

  • . Required Question: 1. Should Matt try to suggest a better method for reducing purchasing costs?...

    . Required Question: 1. Should Matt try to suggest a better method for reducing purchasing costs? (200 words) 3. How can Matt find out more information about the suppliers in a short period of time? (200 words) 3. what are his internal or external resources that he should consider? Custom Equipment It was July 2, and Mat Roberts had just been given his robots/weldguns, affiliate-produced parts/fabricated com- first assignment, te Wire Management Program" ponents, and steel/other metals. Matt was hired...

  • Summary should briefly analyze the central problems and issues of the case and provide some analysis...

    Summary should briefly analyze the central problems and issues of the case and provide some analysis and suggestions. Thank you. Lean Initiatives and Growth at Orlando Metering Company It was late August 2002 and Ed Cucinelli, vice president of Orlando Metering Company (OMC), sat in his office on a late Saturday morning. He had come in to prepare for some strategic planning meetings that were scheduled for the upcoming week. As he noticed the uncommon silence in the building, Ed...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT