A firm with sales of $750,000 has average inventory of $450,000. The industry average for inventory...
A firm with sales of $750,000 has average inventory of $450,000. The industry average for inventory turnover is two times a year. What would be the reduction in inventory if this firm were to achieve a turnover comparable to the industry average? Round your answer to the nearest dollar.
Homework Answers
| Inventory turnover = COGS/inventory |
| 2 = 750000/Inventory |
| Inventory = 375000 |
Reduction = current inventory-new inventory as per industry average = 450000-375000 = 75000
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