Question

Haymitch Global Industries is a world leading producer of loudspeakers and other electronics products, which are sold under brand names like JRH Excelsior, and Haymitch/Krug. The company reported the following amounts in its financial statements in millions): Net Sales Cost of Goods Sold Beginning Inventory Ending Inventory 2016 $5,000 3,900 490 600 2015 $5,060 3,690 410 490 Required: 1. Determine the inventory turnover ratio and average days to sell inventory for 2016 and 2015. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.) Inventory Turnover Ratio Days to Sel 2016 times per year days 2015 times per year days

Answer 1

for 2016

(1)
Inventory turnover ratio = cost of goods sold/average inventory
= $3900/$545
= 7.2 times
Where,
Average inventory = (beginning inventory + ending inventory)/2
= ($490 + $600)/2 = $545

(2)
Average sales period = 365/inventory turnover ratio
= 365/7.2
= 50.7 days

——————————————————
for 2015

(1)
Inventory turnover ratio = cost of goods sold/average inventory
= $3690/$450
= 8.2 times
Where,
Average inventory = (beginning inventory + ending inventory)/2
= ($410 + $490)/2 = $450

(2)
Average sales period = 365/inventory turnover ratio
= 365/8.2
= 44.5 days