A company that manufactures washers and dryers had a cost of goods sold (COGS) last year of $520,000,000. The average value of inventory for raw materials, work in process (WIP), and finished goods are shown in the table below:
The company operates 365 days a year. The number of inventory turns is approximately:
Inventory turnover is calculated as the Cost of Goods Sold (COGS) divided by the average inventory, including raw materials, work in process, and finished goods. In this problem, the COGS is $520,000,000, and the average inventory is the sum of raw materials, work in process, and finished goods: $24,300,000 + $15,600,000 + $19,200,000 = $59,100,000. Therefore, the inventory turnover is $520,000,000 / $59,100,000, which is approximately 8.8.
520,000,000/19,200,000 = 27.1 B is correct
8.8 ????
Inventory Turns = COGS / Average inventory (Finished goods)
B is the correct answer- when calculating inventory turns only use average finish good inventory respective to COGS/ in here 52000000/19200000=27.1
number of inventory turns is $520,000,000 / $59,100,000 = 8.8