Wilkins Manufacturing has sales of
$3.6
million and a gross profit margin of
43%.
Its end-of-quarter inventories are:
Quarter
|
Inventory
|
1
|
$395,000
|
2
|
790,000
|
3
|
1,201,000
|
4
|
203,000
|
a. Find the average quarterly inventory and use it to calculate the firm's
inventory turnover and the average age of inventory. (Assume a 365-day
year.)
b. Assuming that the company is in an industry with an average
inventory turnover of
1.71.7,
how would you evaluate the activity of Wilkins' inventory?
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