Question

Haymitch Global Industries is a world leading producer of loudspeakers and other electronics products, which are sold under brand names like JRH, Excelsior, and Haymitch/Krug. The company reported the following amounts in its financial statements (in millions):

	2016				2015
Net Sales	$	4,600			$	4,660
Cost of Goods Sold		3,500				3,390
Beginning Inventory		450				420
Ending Inventory		580				450

Required:

Determine the inventory turnover ratio and average days to sell inventory for 2016 and 2015. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.)

Answer 1

Average Inventory for 2015
Beginning inventory	$ 420.00
Ending Inventory	$ 450.00
Average Inventory for 2015	$ 435.00
Average Inventory for 2016
Beginning inventory	$ 450.00
Ending Inventory	$ 580.00
Average Inventory for 2016	$ 515.00

Inventory Turnover
Year	Numerator	/	denominator	Inventory Turnover
	COGS	/	Average Inventory	Inventory Turnover
2016	$     3,500.00	/	$             515.00	6.8	times
2015	$     3,390.00	/	$             435.00	7.8	times

Average days to sell Inventory
Year	Numerator	/	denominator	Average days to sell Inventory
	Number of days in a year	/	Inventory Turnover ratio	Average days to sell Inventory
2016	365	/	6.80	53.7	Days
2015	365	/	7.80	46.8	Days