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Basic Question 9 of 10
To project future inventory, an analyst can assume an inventory turnover rate and combine it with projected:
B. COGS.
C. operating income.
A. sales.
B. COGS.
C. operating income.
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 |

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Learning Outcome Statements
demonstrate the development of a sales-based pro forma company model
CFA® 2025 Level I Curriculum, Volume 3, Module 12.