Question

If the inventory turnover ratio cast co is 5x and its gross profits and sales are $270 million and $1,200 million respectivelly then the inventory account for cast is

a.$180 million
b.$182 million
c.$186 million
d.$196 million

Answer 1

c.$186 million

Step-by-step explanation:

Calculation to determine what the inventory account for cast is

Using this formula

Inventory account for cast =Sales - Gross profit/Inventory turnover ratio cast

Where,

Sales=$1,200 million

Gross profit=$270 million

Inventory turnover ratio cast =5x

Let x be the inventory account for cast

Let plug in the formula

5x=$1,200 million-$270 million

5x=$930 million

x=$930 million/5

x=$186 million

Therefore the inventory account for cast is $186 million