Computations
Balance Sheet
Current or Average Dollar of Inventory / Departmental Gross Profit or Net Profit in same category = Departmental Gross or Net Return on Inventory Investment.
This calculates the net return on the dealer’s investment in inventory or the departmental gross. For this example, we will illustrate the Return On Parts and Accessories Inventory.
|
Total Inventory ($ value) Account 242, Parts and Accessories |
$170,000 |
|
Divided by: |
/ |
|
Departmental Gross Profit – Parts and Accessories Dept Gross Profit |
$80,000 |
|
Return on Inventory – Parts and Accessories |
2.13 |