Question

20Y7 20Y6 Cost of goods sold $3,576,270 $3,961,710 Inventories: Beginning of year 744,600 722,700 End of year 810,300 744,600 Required a. Determine the inventory turnover for 20Y7 and 20Y6. Round to one decimal place. 20Y7 20Y6 Inventory turnover b. Determine the number of days’ sales in inventory for 20Y7 and 20Y6. Use 365 days and round to one decimal place. 20Y7 20Y6 Number of days’ sales in inventory days days c. Are the changes in inventory turnover and the number of days’ sales in inventory from 20Y6 to 20Y7 favorable or unfavorable?

Answer 1

2017 Inventory Turnover Ratio : Cost of Goods Sold / Average Invenotry 2016 Beginning Inventory 744600 722700 Ending Invenotry 810300 744600 Average Invenotry 777450 733650 Cost of Goods Sold 3576270 3961710 Inventory Turnover Ratio (Times) 4.6 5.4 Days to sell : ( Average Invenotry / Cost of Goods Sold )*365 2017 2016 Average Invenotry 777450 733650 Cost of Goods Sold 3576270 3961710 Days to Sell (Days) 79.3 67.6 Answer 2017 2016 Inventory Turnover Ratio (Times) 4.6 5.4 Days to Sell (Days) 79.3 67.6 Does the Change in Inventory turnover ans day's sales Unfavorable in invenotry from 20Y6to 2047