The relationship between the volume of goods sold and inventory, computed by dividing the cost...
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The relationship between the volume of goods sold and inventory, computed by dividing the cost of goods sold by the average inventory. Inventory Turnover The following data (in millions) were taken from recent annual reports of Tomato Computer, Inc., a manufacturer of personal computers and related products, and Happy Times Corporation, a manufacturer and distributor of greeting cards and related products: Tomato Happy Times Cost of merchandise sold $4,024,800 $1,072,000 Inventory, end of year 107,000 150,000 Inventory, beginning of the year 65,000 185,000 a. Determine the inventory turnover for Tomato and Happy Times. Round to one decimal place. Tomato Happy Times b. Would you expect Happy Times inventory turnover to be higher or lower than Tomato's? Lower Feedback Check My Work a. Divide the cost of goods sold by the average inventory. The average inventory is the total of the beginning and ending inventories divided by two. b. Consider the components involved in this ratio. Generally, the larger the inventory turnover the more efficiently and effectively the company is managing inventory
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