Question

Exotech has an inventory turn ratio of 60 with $50 million in annual sales, and an average inventory of $250,000. What is Exotech’s cost of goods sold?

Answer 1

Answer:

$15 million

Explanation:

Data provided in the question:

Inventory turn ratio = 60

Annual sales = $50 million

Average inventory = $250,000

Now,

we know,

Inventory turn ratio  = ( Cost of goods sold ) ÷ ( Average inventory )

thus,

60 = ( Cost of goods sold ) ÷ $250,000

or

Cost of goods sold = 60 × $250,000

or

Cost of goods sold = $15,000,000 or $15 million