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The grocery industry has an annual inventory turnover of about 14 times. Organic​ Grocers, Inc., had a cost of goods sold last year of ​$11 comma 190 comma 000​; its average inventory was ​$1 comma 012 comma 820. What was Organic​ Grocers' inventory​ turnover, and how does that performance compare with that of the​ industry? ​a) What was Organic​ Grocers' inventory​ turnover? nothing times per year ​(round your response to two decimal​ places). ​b) How does Organic​ Grocers' performance compare with that of the​ industry? It is ▼ worse than the same as better than the industry.

Respuesta :

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Answer:

Organic Grocers, Inc Inventory turnover ratio 11.05 Times

Explanation:

a-

Inventory turnover ratio is calculated using the formula

Inventory turnover = Cost of Goods Sold / Average Inventory

Cost of Goods sold =  11,190,000  

Average Inventory =  1,012,820  

Inventory turnover =  11,190,000 / 1,012,820 = 11.05 times

The ratio indicates Organic Grocers Performance to convert its inventory into sales during the year is 11.05 times. The is indicator of management performance.

b-

The Performance of Organic Grocers management compare to Industry is worse. The average industry inventory turnover is 14 times while Organic Grocers management achieve 11.05 times. The ratio reflects that Organic Grocers management to improve their performance in order to achieve industry standards. The management need to increase sales or either reduce level of inventory in order to compete with industry Standards.

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