Question

Consider a firm with a 2018 net income of $20 million, revenue of $60 million, and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant, and equipment, how many weeks of supply does the firm hold

Answer 1

Answer: 4.16 weeks

Step-by-step explanation:

From the information given in the question, the number of weeks of supply that the firm hold will be:

= (average inventory/ cost of goods sold) × 52 weeks

= (2/25) × 52

= 4.16 weeks

Therefore, the weeks of supply that the firm hold is 4.16 weeks