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    Inventory turnover and Total Sales

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    Baker Mfg. Inc. (see Table 11.9) wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory.

    a) What is Baker's inventory turnover?
    b) What is Baker's percent of assets committed to inventory?
    c) How does Baker's performance compare to the industry
    leaders?
    TABLE 11.9 For Problems 11.5

    ARROW DISTRIBUTING CORP.
    Net revenue $16,500
    Cost of sales $13,500
    Inventory $ 1,000
    Total assets $ 8,600

    BAKER MFG. INC.

    Net revenue $27,500
    Cost of sales $21,500
    Inventory $ 1,250
    Total assets $16,600

    © BrainMass Inc. brainmass.com October 10, 2019, 7:59 am ad1c9bdddf
    https://brainmass.com/business/operations-research/inventory-turnover-and-total-sales-602909

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    QUESTION A
    Inventory turnover = Cost of sales/Inventory = $21,500/$1,250 = 17.2

    QUESTION B
    Percent of assets committed to inventory = Inventory/Total assets = ...

    Solution Summary

    This solution involves comparing industry and company inventory turnover and percent of inventory to total sales.

    $2.19