Question

Baker Mfg Inc. wishes to compare its inventory turnover to those of industry​ leaders, who have turnover of about 1313 times per year and 88​% of their assets invested in inventory. Baker Mfg. Inc. Net Revenue ​$27 comma 50027,500 Cost of sales ​$20 comma 05020,050 Inventory ​$1 comma 2801,280 Total assets ​$17 comma 02017,020 ​a) What is​ Baker's inventory​ turnover? 15.6615.66 times per year ​(round your response to two decimal​ places). ​b) What is​ Baker's percentage of assets committed to​ inventory? 88​% ​(enter your response as a percentage rounded to two decimal​ places).

Answer 1

(A) 156.63 times

(B) 0.75

Step-by-step explanation:

(A) The computation of the inventory turnover ratio is shown below:

Inventory turnover ratio = (Cost of goods sold) ÷ (Inventory)

= $2,005,020,050 ÷ $12,801,280

= 156.63 times

(B) The computation of the percentage of assets is shown below:

= (Total inventory) ÷ (total assets) × 100

= ($12,801,280) ÷ ($1,702,017,020) × 100

= 0.75