Answer:
the inventory turns will be "10". A further explanation is given below.
Explanation:
The given values are:
Annual sales,
= $68
Number of inventory turns,
= 8
Increase annual sales,
= 25%
Now,
The average inventory will be:
= [tex]\frac{Annual \ sales}{Number \ of \ inventory \ turns}[/tex]
On substituting the given values, we get
= [tex]\frac{68}{8}[/tex]
= [tex]8.5 \ million[/tex]
The projected annual sales will be:
= [tex]68\times 1.25[/tex]
= [tex]85[/tex]
then,
The revised inventory turns will be:
= [tex]\frac{Project \ annual \ sales}{Average \ inventory}[/tex]
= [tex]\frac{85}{8.5}[/tex]
= [tex]10[/tex]
