Question
Since opening your new retail business, you have found yourself steadily diversifying your product offering and thereby expanding your inventory - a practice commonly referred
Since opening your new retail business, you have found yourself steadily diversifying your product offering and thereby expanding your inventory - a practice commonly referred to as line extension. Cash is running short and you realize that you need to get better control of your inventory to avoid a disastrous liquidity squeeze. So, you begin to take a hard look at your numbers. Inventory at the recent year-end totaled $163,000. Your sales projections for the coming year are $120,000 per month. Your estimated gross profit margin is 40%. Experts in your industry have advised you that inventory turnover levels in your business should be at least 6.0. You've decided to target that level. What should be your targeted monthly inventory level
in order to keep your turnover rate at least 6.0?
$_____________________
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