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Inventory Investment Calculations

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Calculate the average investment in inventory for each of the following situations. Assume a 365-day year.
a. The firm's annual sales were $18 million, its gross profit margin was 32%, and its average age of inventory is 45 days.
b. The firm's annual sales were $325 million, its cost of goods sold are 80% of sales, and it turns its inventory 10 times per year.
c. The firm's annual cost of goods sold total $120 million, and it turns its inventory about every 70 days.

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The expert examines inventory investment calculations.

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Average investment in inventory = COGS/inventory turnover
Inventory turnover = sales/inventory
Sales = $18,000,000
Gross profit margin = ...

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