Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Windsor. Because of the specialized manufacturing process employed, considerable work- in- process and raw material inventories are created. The current inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is

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Inventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Beginning inventory + Ending inventory) / 2Beginning inventory is not given, so we cannot calculate the exact inventory turnover. However, we can estimate the inventory turnover by using the expected cost of goods sold and the average inventory.Expected cost of goods sold = Sales (at cost) = $24 millionAverage inventory = ($1,152,000 + $2,725,000 + $3,225,000) / 2 = $3,700,500Estimated inventory turnover = $24 million / $3,700,500 = 6.49Therefore, the inventory turnover that Henderson Corporation is currently expecting is greater than or equal to 3.0.

Henderson Corporation Is a Supplier of Alloy Ball Bearings to Auto