Final answer:
To compute inventory turnover for Company A, the formula COGS / Average Inventory is used. It is important to include all intermediate calculations and to provide the result to one decimal place, with an additional decimal for verification purposes.
Step-by-step explanation:
To compute inventory turnover for Company A, we would need to know two key pieces of data: the cost of goods sold (COGS) and the average inventory for the period. The formula to compute inventory turnover is:
Inventory Turnover = COGS / Average Inventory.
The answer should be calculated to one decimal place, and intermediate calculations should not be rounded. Inventory turnover is an important metric as it indicates how quickly a company is selling and replacing its inventory. A higher turnover rate might indicate strong sales or effective inventory management, while a lower turnover rate may suggest overstocking or less demand for the company's products.
Show work and add one more decimal place to the answer as a way to validate that you did more than copy the table result. This ensures that the calculation has been understood and carried out properly rather than simply reproducing given data.