# The Robinson Company had a cost of goods sold of \$1,000,000 in 2011 and \$1,200,000in2012. Calculate the inventory turnover for each year. Comment on your findings. What would have been the amount of inventories in 2012 if the 2011 turnover ratio hadbeen maintained?

This financial statement was provided by dayco, a manufacturing company.

First, determine 2011’s average inventory. Then calculate each year’s inventory turnover. To calculate the inventory turnover for each year, we first need to determine what average inventories were in 2011 and 2012.

After this is done, it’s possible to use the data to calculate inventory turnover for each of these years. It is calculated by subtracting the cost of goods sold from average inventory. This allows us to determine which application would be most appropriate for each situation. The 2011 example shows that the average inventory was \$500,000 and had a COGS (cost of goods sold) of \$1,000,000, giving an inventory ratio of 2. In 2012 however, there were a COGS (1,200,000) and an average inventory (\$600,000), which gave an inventory ratio of 2. However, whatever comes to pass, the end result will be a happy one. All this demonstrates why it’s now more critical than ever before equip oneself with necessary skills knowledge order adequately address any situation one may encounter throughout their journey no matter what comes up along way eventually leading successful outcome when all said done.
Answering your final question, the inventory in 2012 would have been \$700,000. (\$1.2million divided by 1.7).

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