Question

In its 2019 annual report, Teal Mountain, Inc. reported inventory of $644 million on January 31, 2020, and $554 million on January 31, 2019, cost of goods sold of $5,890 million for the year, and net sales of $7,240 million for the year.

Compute Teal Mountain’s inventory turnover for the fiscal year 2019. (Round answer to 2 decimal places, e.g. 7.62.)

Inventory turnover

enter the inventory turnover in times rounded to 2 decimal places

times

Compute Teal Mountain’s average days to sell inventory for the fiscal year 2019. (Round answer to 2 decimal place, e.g. 7.65. Use 365 days for calculation.)

Average days to sell inventory

enter average days to sell inventory rounded to 1 decimal place

days

Answer 1

Solution

Inventory turnover= 9.83 times

Average days to sell inventory = 37.1 days or 37.1 days

Working

Inventory Turnover ratio
	Cost of goods sold	/	Average Inventory	=	Inventory Turnover ratio
	$            5,890	/	$              599	=	9.83	Times

.

Average days to sell inventory
	Days in a year	/	Inventory Turnover ratio	=	Average days to sell inventory
	365	/	9.83	=	37.1	Days

.

Average Inventory calculation
Beginning balance	$          554.00
Ending balance	$          644.00
Total	$      1,198.00
Average Inventory	$          599.00