In the last financial year, London’s Enwad Hotel group aieved a revenue of £28.75 million and a gross profit margin of 40 per cent. Its end-of-quarter inventory balances were as follows:

Required

a) Calculate the firm’s inventory turnover and the average age of inventory.

b) Comment on Enwad’s liquidity, assuming most of its competitors operate with an inventory turnover of 40.

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Quarter 1 2 3 3 4 Inventory 400,000 800,000 900,000 200,000