Inventory and Turnover Ratio

Ohio Valley Homecare suppliers, Inc, had $20 million in sales in 2004. Its cost of goods sold was $8 million and its average inventory balance was $2,000,000

The inventory turnover ratio for Ohio Valley Homecare Suppliers (OVHS) in 2004 is
a. 2x
b. 3x
c. 4x
d. 5x
3. 6x

The average days of inventory in the industry is 73 days. By how much would OVHS reduce its investment (inventory balance) if it could improve its inventory days (outstanding days) to meet
the industry average (73 days)
a. $2,000,000
b. $2,400,000
c. $1,600,000
d. $400,000
e. $800,000

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