Question
In: Accounting
Inventory Turnover and Days’ Sales in Inventory – W. Glass & Company reported the following information...
Inventory Turnover and Days’ Sales in Inventory – W. Glass & Company reported the following information in its recent annual report:
|
2015 |
2016 |
|
|
Cost of goods sold |
$4,000,000 |
$4,600,000 |
|
Beginning inventory |
$900,000 |
860,000 |
|
Ending inventory |
860,000 |
640,000 |
Calculate the company’s inventory turnover and days’ sales in inventory for both years.
Solutions
Expert Solution
Inventory turnover = Cost of goods sold / Average inventory
Days’ sales in inventory = 365 / Inventory turnover
2015:
Inventory turnover = $4,000,000 / [($900,000 + $860,000) / 2] = 4.55
Days’ sales in inventory = 365 / 4.55 = 80.3 days
2016:
Inventory turnover = $4,600,000 / [($860,000 + $640,000) / 2] = 6.13
Days’ sales in inventory = 365 / 6.13 = 59.5 days
ekkarill92 answered 2 years agoRelated Solutions
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