A firm’s inventory turnover (IT) is 5 times the cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
A. $160,000 is released.
B. $100,000 is additionally invested.
C. $60,000 is additionally invested.
D. $60,000 is released.
Answer:D
A firm’s inventory turnover (IT) is 5 times the cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
A. $160,000 is released. B. $100,000 is additionally invested. C. $60,000 is additionally invested. D. $60,000 is released.