Question

The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.

Answer 1

The inventory turnover is 3.84 times

Step-by-step explanation:

The computation of the inventory turnover ratio is shown below:

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

where,

Cost of the good sold per year = cost of goods sold per week × number of weeks in a year

= $1.32 million × 50 weeks

= $66 million

And, the average inventory is $17.2 million

Now put these values to the above formula

So, the ratio would equal to

= $66 million ÷ $17.2 million

= 3.84 times