Question

Suppose at December 31 of a recent year, the following information (in thousands) was available for sunglasses manufacturer Oakley Inc.: ending inventory $150,221; beginning inventory $109,841; cost of goods sold $349,744 and sales revenue $694,487. Calculate the inventory turnover for Oakley, Inc. (Round inventory turnover to 2 decimal places, e.g. 5.12.) Inventory turnover enter Inventory turnover rounded to 2 decimal places times eTextbook and Media List of Accounts Calculate the days in inventory for Oakley, Inc. (Round days in inventory to 0 decimal places, e.g. 125.) Days in inventory enter Days in inventory rounded to 0 decimal places days

Answer 1

Answer:

1. 2.69 times

2. 135.70 days

Explanation:

The computation of inventory turnover is shown below:-

Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory

Average Inventory = Opening inventory + Closing Inventory ÷ 2

= ($109,841 + $150,221) ÷ 2

= $130,031

Inventory Turnover Ratio = $349,744 ÷ $130,031

= 2.69 times

The computation of days in inventory is shown below:-

Days in Inventory = Average Inventory ÷ Cost of Goods Sold × 365

= $130,031 ÷ $349,744 × 365

= 135.70 days