For the year ended 2011, Equine Supplies had cost of goods sold of $280,000 and gross margin of $400,000. Inventory levels were as follows: $40,000 at December 31, 2010 and $44,000 at December 31, 2011. ROI in inventory is:

Question

Quizplus · Accepted Answer

ROI in inventory = (Gross margin / Average inventory) x 100
Average inventory = (Begining inventory + Ending inventory) / 2
Average inventory = ($40,000 + $44,000) / 2 = $42,000

ROI in inventory = ($400,000 / $42,000) x 100 = 952.38%
Therefore, the correct answer is C) 667%.

For the Year Ended 2011, Equine Supplies Had Cost of Goods