Question

A company had a cost of goods sold of $2.5 million and has turned over their inventory 4.7 times. What would be the average aggregate inventory value?

Answer 1

To find the average aggregate inventory value, divide the cost of goods sold by the inventory turnover ratio.

Step-by-step explanation:

To calculate the average aggregate inventory value, we can use the inventory turnover ratio formula:

Inventory turnover ratio = Cost of Goods Sold / Average Inventory

Since the turnover ratio is given as 4.7 times, we can rearrange the formula to find the average inventory:

Average Inventory = Cost of Goods Sold / Inventory turnover ratio

Plugging in the values, we get:

Average Inventory = $2.5 million / 4.7 = $531,914.89

Therefore, the average aggregate inventory value would be approximately $531,914.89.