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On average, a wine company can sell 10,000 bottles of wine per month. If it could turn its inventory 6 times per year, how many bottles of wine is the company's average inventory?

Answer :

Final answer:

The average inventory of the wine company is 20,000 bottles of wine.

Explanation:

In order to calculate the average inventory of the wine company, we need to divide the total bottles of wine sold per year by the inventory turnover ratio. The inventory turnover ratio is calculated by dividing the number of times the company can turn its inventory in a year by the average monthly sales. In this case, the wine company can turn its inventory 6 times per year, and the average monthly sales are 10,000 bottles of wine. Therefore, the average inventory of the wine company would be:



Average inventory = (Number of bottles sold per year) / (Inventory turnover ratio)



Plugging in the given values:



Average inventory = (10,000 bottles x 12 months) / 6 = 20,000 bottles



So, the company's average inventory is 20,000 bottles of wine.

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