Question

The business firm of Tinker, Evers and Chance had a level of inventory of $60 million on January 1, 1908, and ended up the year with an inventory of $70 million on December 31, 1908. The company's expenditures on new plant and equipment for the year was $120 million, while its depreciation on the plant and equipment was $90 million.How much was inventory investment for the year

Answer 1

Tinker, Evers and Chance inventory investment 10 millions

Step-by-step explanation:

Inventory investment:

Will be the diference in amount betwene the ending and beginning invnetory. It assumes that a company will use the revenue from sale to at least maintan ther inventory.

When the company invest on inventory, it meas it increase their stock of goods.

A company will disinvest if the ending is lower than beginning, because the sales proceeds were not used to purchase inventory.

Ending inventory - beginning inventory = inventory investment

70 - 60 = 10