COS/Finished Goods Ratio
jewels.p
Registered Posts: 1,774 Beyond epic contributor 🧙♂️
Can someone explain this to me please
C.O.S = £6.08m
Finished Goods = £0.4m
The ratio required is COS to Finished Goods.
The industry performance figure to compare the answer to is 8.10
I got the 6.08/0.4 = 15.2
But the explanation in the answer says: "the company is turning over its finished goods inventories faster than the industry as a whole. It is holding approx 0.8 months compared with 1.48 months for the sector. Where do these figures come from when the figures are 15.2 and 8.10 respectively?
C.O.S = £6.08m
Finished Goods = £0.4m
The ratio required is COS to Finished Goods.
The industry performance figure to compare the answer to is 8.10
I got the 6.08/0.4 = 15.2
But the explanation in the answer says: "the company is turning over its finished goods inventories faster than the industry as a whole. It is holding approx 0.8 months compared with 1.48 months for the sector. Where do these figures come from when the figures are 15.2 and 8.10 respectively?
0
Comments
-
They used the ratio in months:
It's finished goods/ cost of sales x 12 (months instead of 365 days)
They got to the industry average by calculating it based on the result:
1/8.10 x 12 (months).0 -
They used the ratio in months:
It's finished goods/ cost of sales x 12 (months instead of 365 days)
They got to the industry average by calculating it based on the result:
1/8.10 x 12 (months).
Are you sure you havent already passed DFS? You know FAR too much to be sitting this exam with us on Thursday?:sneaky2:0 -
Are you sure you havent already passed DFS? You know FAR too much to be sitting this exam with us on Thursday?:sneaky2:
I just think it's silly that they give you a ratio and then use a different ratio (same but recalculated) to discuss the answer, so I hope they don't put tricky things like this in our exam!0
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