E7-13 Analyzing and Interpreting the Inventory Turnover Ratio [LO 7-5] Aegis Ind

Question

E7-13 Analyzing and Interpreting the Inventory Turnover Ratio [LO 7-5]

Aegis Industries Inc. is the biggest snowmobile manufacturer in the world. It reported the following amounts in its financial statements (in millions):

  

  

Calculate the inventory turnover ratio for 2012, 2011, and 2010. (Round your answers to 1 decimal place.)

         

Calculate the average days to sell inventory for 2012, 2011, and 2010. (Use 365 days in a year. Use rounded "Inventory Turnover Ratio" and round your answers to 1 decimal place.)

        

Is Aegis performing better than its competitor Sabertooth where the inventory turned over is 6.9 times in 2012 (52.9 days to sell). Both companies use the same inventory costing method (FIFO).

Aegis Industries Inc. is the biggest snowmobile manufacturer in the world. It reported the following amounts in its financial statements (in millions):

Explanation / Answer

Answer

1A ) inventory turnover ratio

inventory turnover ratio = cost of goods sold / average inventory

1B )

average days to sell inventory = number of days in a year / inventory turnover ratio

2 ) yes

2012 2011 2010 cost of goods sold 4020 3550 3050 average inventory 470 420 360 inventory turnover ratio 8.5 8.4 8.5

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