Mistake in Official Financial Analysis and Reporting Book??

Hey Guys,

I have a question. On page 10 ist the first example.

Question Number 2: Calculate the inventory turnover ratios!

On page 3 in the Official Book you’ll have a Financial Ratio List.

Inventory Turnover Ratio = COGS/Ave. Inventory

On page 12 you’ll see the solution for Question 2. They use this formula:

COGS/Ending inventory!!!

I am wrong??? I think there is a mistake

hmmm check the errata but in the problem do they give you the beginning and ending inventory in order to create the average? if not then you go w/ ending invt i believe

Yes as Andrew says, it depends on whether Beginning inventory is given. I have read a statment that whenever average is to be taken, if given you take the average else you take the ending value. (It was in CFA level 1 FSA book I guess).

The best way is always to use the average. In this example we can calculate the begining and ending values…