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35. Mighty Power Pty Ltd manufactures high-quality pendant in a factory located in Melbourne. Last year the firm has sales of $100 million and a
35. Mighty Power Pty Ltd manufactures high-quality pendant in a factory located in Melbourne. Last year the firm has sales of $100 million and a gross profit margin of 40%. (a) How much inventory can Mighty Power hold if it maintains an inventory turnover ratio of at least 6.0 times? (2 marks) (b) Currently, some of the Mighty Power's inventory includes $2 million of outdated and damaged goods that simply remain in inventory and are not saleable. What inventory turnover ratio must the good inventory have, in order to achieve an overall turnover ratio of at least 6.0 (including the unsaleable items)? (2 marks)
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