Tigongzhe Company is a Chinese supplier of smartphone camera parts to manufactur

Question

Tigongzhe Company is a Chinese supplier of smartphone camera parts to manufacturing companies in China that assemble smartphones. Last year it had cost of goods sold of $63.7 million and the following average value of production materials and parts, work-inprocess, and finished goods inventory:

Determine the company’s inventory turns and days of supply being held in inventory. (Round answers to 1 decimal place, e.g. 52.2. Use 365 days for calculation.)

Explanation / Answer

Cost of goods sold = $63.7 million = $63700000

Average inventory = production materials + work in progress +finished goids = $1216000+$6490000+4336000 = $12042000

Inventory turns = cost of goods sold / Average inventory

= $63700000/12042000

= 5.3

Inventory used per day = Cost of goods sold / number of days per year = $63700000/365 = $174520. 55

Days of supply = Average inventory / Inventory used per day

= 12042000/174520.55

= 69.0

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