Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Find out more

Basic Question 3 of 5

To project future inventory, an analyst can assume an inventory turnover rate and combine it with projected:

A. sales.
B. COGS.
C. operating income.
Check Answer Previous Q Next Q Print

User Contributed Comments 2

User Comment
tpraturi Inventory Turnover Rate = COGS / Average Inventory
davidt876 good point tpraturi!

so if you're modelling ending inventory (EI) when we know beginning inventory (BI) and the average historical turnover rate:

average inventory = COGS / inventory turnover rate
(EI+BI)/2 = COGS / inventory turnover rate
EI + BI = (COGS / inventory rate) * 2

EI = ((COGS / inventory rate) * 2) - BI
You need to log in first to add your comment.
I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

describe approaches to balance sheet modeling;

CFA® 2024 Level II Curriculum, Volume 2, Module 17.