Inventory Turnover and Days\' Sales in Inventory The Southern Company installed

Question

Inventory Turnover and Days' Sales in Inventory The Southern Company installed a new inventory management system at the beginning of 2012. Shown below are data from the company's accounting records as reported out by the new system: 2012 2013 Sales Revenue Cost of Goods Sold1,140,000 1,190,000 Beginning Inventory 500,000530,000 Ending Inventory $11,800,000 $12,000,000 30,000 600,000 Calculate the company's (a) inventory turnover and (b) days' sales in inventory for 2012 and 2013. Round your answer to two decimal points. 2012 2013 Inventory turnover 0 Days sales in inventory Check

Explanation / Answer

Computation of Inventory Turnover Detail 2012 2013 Opening Inventory $500,000 $530,000 Closing Inventory $530,000 $600,000 Average Inventory ( Opening + Closing)/2 $515,000 $565,000 Cost of Goods Sold $1,140,000 $1,190,000 Inventory Turnover Ratio ( in Times) 2.21 2.11 COGS/Average Inventory Computation of Day's Sales in inventory Detail 2012 2013 Inventory turnover Ratio 2.21                   2.11 Day's in a year                     365 365 Day's Sales In Inventory ( in Days) 165.16 172.99 (365 Days/Inventory Turnover Ratio)

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