Question

A manufacturing company has annual sales of $180,000 and inventory of $40,000. The inventory turnover ratio for the company is __________.

Answer 1

4.5

Step-by-step explanation:

Inventory refers to the goods that a company has in its stock. Inventory includes raw materials and finished goods sold by the company.

Inventory turnover refers to the number of times a company sells and replaces its inventory during a given period.

Annual sales of a manufacturing company
`=\$180,000`

Inventory
`=\$40,000`

Inventory turnover ratio for the company = Sales/Inventory

`=(180,000)/(40,000) =4.5`