Homework Answers
First we will calculate the cost of goods sold as per below:
Gross profit margin = 40% . It means cost of goods sold = 60%. So,
Cost of goods sold = 60% * Revenues
Cost of goods sold = 60% * $100m = $60m
Now,
Formula for inventory turnover = Cost of the goods sold / inventory
Given: Cost of the goods sold = $60m, Inventory turnover = 50
Putting the values in the above formula, we get,
50 = $60 / Inventory
Inventory = $60 / 50
Inventory = $1.2 million
So, inventory at end of the year = $1.2m
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