A firm is planning for next year and has developed the following information.
This year's sales $7.90M
Next year's sales $9.48M
This year's inventory $2.37M
This year's cost ratio* 60.0% *Cost of goods sold (COGS)
Next year's cost ratio* 55.0% as a % of sales
What inventory balance should be included in next year's plan if management intends to increase inventory turnover by two turns
in the coming year? Calculate using ending balances and the COGS formulation of inventory turnover.
A) $1.74M
B) $1.90M
C) $1.30M
D) $1.24M
C
Business
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