Question

The following information is available for Omari Corporation for 2018 :

            Beginning inventory               $   700,000

            Ending inventory                         800,000

            Cost of goods sold                  6,000,000

            Sales                                        8,000,000

Instructions

1. Calculate the inventory turnover for Omari Corporation. (2.5 marks)

2. Calculate days in inventory for Omari Corporation. (2.5 marks)

Answer 1

• Requirement [a]

A	Cost of Goods Sold		$6,000,000
B	Beginning Inventory	$700,000
C	Ending Inventory	$800,000
D = B+C	Total Inventory	$1,500,000
E = D/2	Average Inventory		$750,000
F = A/E	Inventory Turnover ratio	[$ 6000000 / 750000]	8 times = Answer

• Requirement [b]

Days in Inventory = 360 days / 8 times
= 45 days.