Question 1 Riverbed Foods Inc. reported inventory of $5,776 million at the end o

Question

Question 1

Riverbed Foods Inc. reported inventory of $5,776 million at the end of its 2017 fiscal year and $5,540 million at the end of its 2016 fiscal year. It reported cost of goods sold of $36,300 million for the fiscal year 2017 and net sales of $54,700 million for fiscal year 2017.

Calculate the company’s inventory turnover and the average days to sell inventory for the fiscal year 2017. (Round answers to 2 decimal places, e.g. 52.75. Use 365 days for calculation.)

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Explanation / Answer

Inventory Turnover Ratio = Cost of goods Sold / Average Inventory

= $36,300 / [(  $5,776 + $ 5,540) /2]

= 6.42 times per year

Average days to sell inventory = 365 Days / Inventory Turnover Ratio

= 365 / 6.42

= 56.85 days

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