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Tin Company and Aluminum Company reported the following information in their financial statements, prior to their merger: Tin Company Aluminum Company $ millions Sales COGS Inventories Sales COGS Inventories 2019 $42,750 $40,775 $10,005 $66,420 $56,175 $25,350 2018 41,250 29,960 12,660 69,150 42,700 26,950 To the closest hundredth, how much is the 2019 inventory turnover for Tin Company

Respuesta :

Answer:

3.61

Explanation:

The data in the question are merged together and they are first separated before answering the question as follows:

                        Tin Company                        Aluminum Company

$ millions   Sales    COGS     Inventories    Sales       COGS    Inventories

2019     $42,750    $40,775    $10,005      $66,420   $56,175     $25,350

2018       41,250       29,960      12,660        69,150      42,700      26,950

Answer is as follows:

Tin Company's average inventory = ($10,005 + $12,600) ÷ 2 = $11,302.50

Tin Company's cost of goods sold (COGS) in 2019 = $40,775

Tin Company's 2019 inventory turnover = COGS ÷ Average inventory = $40,775 ÷ $11,302.50 = 3.61

Tundexi

The inventory turnover for Tin Company is 3.60 in 2019.

Average inventory means the average amount the inventory over different accounting period.

  • The formulae for Average inventory is {Beginning inventory + Ending inventory} / 2

Average inventory = {$12,660 + $10,005} / 2

Average inventory = $22,665 / 2

Average inventory = $11,332.5

  • The formulae for Inventory turnover is [Cost of goods sold / Average inventory]

Inventory turnover = $40,775 /  $11,332.5

Inventory turnover = 3.5981

Inventory turnover = 3.60

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