Question

CCCXCIX + The following data Beginning investors Cost of sold from the of even Current Year 1.500.000 940.000 30.000 10.500.000 10.00 u nd the Determine for at w ound s to Previous ve 1. Inventory tumeve nye

Answer 1

(a)			Current Year		Previous Year
1	Inventory turnover ratio		9 times		12 times
2	Number of days' sales in inventory		41 days		30 days
(b)	The inventory position of the business has improved. The inventory turnover has decreased.,
	while the number of days' sales in inventory has increased. The sales volume has decreased
	faster than the inventory, resulting in a increased/improved inventory position
			Current Year		Previous Year
	Sales		$          18,500,000		$             2,000,000
	Beginning investories		$                940,000		$                860,000
	Cost of goods sold		$             9,270,000		$          10,800,000
	Ending inventories		$             1,120,000		$                940,000
	Inventory turnover =	Cost of goods sold/Average turnover
	Average turnover=	(Beginning inventory+Closing inventory)/2
	Current year:
	Average inventory= (940000+1120000)/2
		$   1,030,000.00
	Inventory Turnover= 9270000/1030000
		9	times
	Previous year:
	Average inventory= (860000+940000)/2
		$       900,000.00
	Inventory Turnover= 10800000/900000
		12	times
	Number of Days' Sales in inventory = 365/inventory turnover ratio
	Current year:
	Number of Days' Sales in inventory = 365/9
			41	days
	Previous year:
	Number of Days' Sales in inventory = 365/12
			30	days