Question

The following data were extracted from the income statement of Keever Inc.: Current Year Previous Year Sales Beginning inventories $18,500,000 940,000 $20,000,000 860,000 10,800,000 940,000 Cost of goods sold 9,270,000 1,120,000 Ending inventories a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume 365 days a year. Current Year Previous Year 1. Inventory turnover 2. Number of days' sales in inventory days days , while the number of days' sales in inventory has . The sales volume b. The inventory position of the business has has faster than the inventory, resulting in a . The inventory turnover has inventory position.

Answer 1

Inventory Turnover = Cost of goods sale / Average inventory

Current year = Cost of goods sold / (Beginning inventory + Closing Inventory/2)

= 9270000 / (940000 + 1120000/2)

=v 9270000/ 1030000 = 9 times

Previous year = 1080000/ ( 860000+940000/2)

= 1080000/900000

= 12 times

Number of days sales in inventory = Number of days in a year / Inventory turnover

Current year = 365 / 9 = 40.55

previous year = 365/12 = 30.42