Question: 5. The following data are pulled from a recent Walsh Manufacturing annual report. Assets Raw material inventory $75,000 Work-in-process inventory $25,000 Finished goods inventory $100,000
5. The following data are pulled from a recent Walsh Manufacturing annual report.
Assets
Raw material inventory $75,000
Work-in-process inventory $25,000
Finished goods inventory $100,000
Property, plant & equipment $500,000
Other assets $200,000
Total assets $900,000
Condensed Income Statement
Revenue $2,000,000
Cost of goods sold $600,000
Other expenses $1,000,000
Net income $400,000
Calculate:
- Percent invested in inventory (4 points)
Total Inventory = Work in Process + Finished Goods + Raw Material
$25,000 + $100,000 + $75,000 = $200,000
Percent Invested in Inventory = Total Inventory Investment / Total Assets * 100
$200,000 / $900,000 * 100
=22.22%
- Inventory turnover (3 points)
Inventory turnover = Cost of Goods Sold / Total Inventory
$600,000 / $200,000 = 3
- Weeks of supply. (3 points)
Weeks of Supply = Total Inventory / Cost of Goods Sold * 52
$200,000 / $600,000 * 52 = 17.33 Weeks
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