Brief Exercise 9-11 In its 2015 annual report, Gap Inc. reported inventory of $1

Question

Brief Exercise 9-11 In its 2015 annual report, Gap Inc. reported inventory of $1,889 million on January 31, 2015, and $1,928 million on February 1, 2014, cost of goods sold of $10,146 million for 2015, and net sales of $16,435 million. Compute Gap’s inventory turnover for the fiscal year 2015. (Round answer to 2 decimal places, e.g. 7.62.) Inventory turnover times LINK TO TEXT Compute Gap’s average days to sell inventory for the fiscal year 2015. (Round answer to 1 decimal place, e.g. 7.6.) Average days to sell inventory days

Explanation / Answer

Solution:

Average inventory = (Beginning inventory + Ending inventory) / 2 = ($1,889 + $1,928) /2 = $1,908.50 million

Cost of goods sold = $10,146 million

Inventory turnover ratio = Cost of goods sold / Average inventory

= $10,146 / $1,908.50 = 5.32 times

Average days to sell inventory = Nos of days in a year / Inventory turnover ratio

= 365 / 5.32 = 68.6 days

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