Perez Corporation has the following financial data for the years 20X1 and 20X2: 20X1 20X2...

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Perez Corporation has the following financial data for the years 20X1 and 20X2: 20X1 20X2...

Perez Corporation has the following financial data for the years 20X1 and 20X2:

	20X1		20X2
Sales	$	5,868,000	$	6,708,000
Cost of goods sold		4,645,500		5,869,500
Inventory		489,000		559,000

a. Compute the inventory turnover for each year using the formula Sales/Inventory. (Round your answers to 2 decimal places.)

b. Compute inventory turnover based on an alternative calculation that is used by many financial analysts, Cost of goods sold/Inventory, for each year. (Round your answers to 2 decimal places.)

business accounting

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Answer 1

Answer #1

Answer a:

i) Inventory turnover 20X1 = Sales ÷ Inventory

= $5,868,000 ÷ $489,000

= $12.00

ii) Inventory turnover 20X2 = Sales ÷ Inventory

= $6,708,000 ÷ $559,000

= $12.00

Answer b:

i) Inventory turnover 20X1 = Cost of goods sold ÷ Inventory

= $4,645,500 ÷ $489,000

= $9.50

ii) Inventory turnover 20X2 = Cost of goods sold ÷ Inventory

= $5,869,500 ÷ $559,000

= $10.50

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Answer 2

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