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Average Investment in Inventory

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Assuming a 360-day year, calculate what the average investment in inventory would be for a firm, given the following information in each case:

a. The firm has a cost of goods sold figure of $480,000 and an average age of inventory of 40 days.
b. The firm has a cost of goods sold figure of $1,150,000 and an inventory turnover ratio of 5.

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The solution explains how to calculate the amount of average investment in inventory given the data assuming a 360-day year.

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a. The firm has a cost of goods sold figure of $480,000 and an average age of inventory of 40 days. ...

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