Question

Clothes, Inc. projects that sales will grow at a compound rate of 7% per year for years 2011- 2013 and that the cost of goods sold to sales percentage will equal that realized in 2010. Compute the projected implied level of inventory at the end of 2011 to 2013.

Answer 1

Answer:Inventory turnover ratio 6.85 times

Explanation:

Given

Cost of goods sold =$35,952

Opening inventory=$5548

Closing inventory=$4948

Average inventory = (Opening inventory + closing inventory)/ 2

=(5548+4948)/2

=$5248

Inventory ratio = Cost of goods sold/ average inventory for the year

=35952/5248

=6.85 times