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9 March, 08:22

Early in 2022, Stevenson Incorporated switched to a JIT (just-in-time) inventory system. Financial information for the two most recent years is listed below: How many times did inventory turnover increase as a result of the switch to the JIT system?

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  1. 9 March, 08:36
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    3.8 times

    Explanation:

    Inventory turnover indicates how many times a company sells and replaces its stock of goods during a particular period. The formula for inventory turnover ratio is the cost of goods sold divided by the average inventory for the same period.

    $ 320,000 / 63,000 = 5.1 times in 2022

    $283,500 / 32,000 = 8.9 times in 2023

    Therefore inventory turnover increase as a result of the switch to the JIT system by 8.9 times - 5.1 times = 3.8 times
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