Dell Computer is the leading manufacturer of personal computers.In a recent year

Question

Dell Computer is the leading manufacturer of personal computers.In a recent year, it reported the following in dollars inmillions:

Required:

Dell Computer is the leading manufacturer of personal computers.In a recent year, it reported the following in dollars inmillions: Net sales revenue $41.444 Cost of sales 33.892 Beginning invenLory 306 Ending inventory 327 Required: Determine the inventory turnover ratio and average days to sellinventory for the current year. Explain the meaning of each number.

Explanation / Answer

Inventory turnover ratio Cost of goods sold Average inventory This means number of times a company's average inventory is soldduring the year. 33,892                                                  Average inventory = beg. inv + end.inv = 306 +327   = 316.50 316.50                                                                                           2                        2 = 107 which means the company sold its inventory on an average of 107times. 2. Average days to sell inventory Average number of days taken to sell inventory on hand. Days in year Inv. turnover 365 107 =3.41 days. some books use 360 days for days in year. Using either 360 days or365 days are correct. Please Rate when you get the answer !

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