COS/Finished Goods Ratio

jewels.p

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?

Rinske

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).

jewels.p

Rinske wrote: »

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:

Rinske

jewels.p wrote: »

Are you sure you havent already passed DFS? You know FAR too much to be sitting this exam with us on Thursday?:sneaky2:

I'm sorry and yes I am absolutely sure.

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!