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E6-25 (similar to) Question Help New Home reported the following income statement for the year ended December 31, 2019: (Clic

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Answer #1

Answer to 1

New Home's Inventory turnover rate for the year

= Sales Revenue   

Average Inventory

= Sales Revenue

( Beginning Merchandise Inventory + Ending Merchandise Inventory)/2

= 120000

(9200+13800)/2

= 120000

11500

= 10.43

Answer to 2

Let us assume number of days in a year is 365 days

New Home's days' sales in turnover for the year

= 365

Inventory turnover ratio

= 365

10.43

= 34.99 days or 35 days

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