Brief Exercise 18-12 (Essay) The following data are from the income statements o

Question

Brief Exercise 18-12 (Essay) The following data are from the income statements of Haskin Company. 2017 2016 $6,240,000 860,000 4,661,000 Sales revenue Beginning inventory Purchases Ending inventory $6,420,000 940,000 4,340,000 1,020,000 940,000 2017 2016 (1) Inventory turnover 4.3 times 5.1 times (2)/Days in inventory 84.9 days 71.6 days udy What conclusions concerning the man inventory can be drawn from the inventory turnover and days in inventory? Click if you would like to Show Work for this question: Qpen s 20180720-115025 pg

Explanation / Answer

As observed the Inventory turnover ratio which has been declining in current year as compared to previous year and days sales in inventory is increasing, the inventory turnover ratio has been declined inspite of marginal increase in sales due to increase in inventory level of the firms more than increase in sales. That means the turnaround ratio of inventory in to sales is brought down and inventories has been kept in the stores for larger days (which is imperative from the increase in number of days sales in inventory to 84.9 days from 71.6 days in 2016.

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