Answer:
1. inventory turnover: 10 times
2. Average daily cost of goods sold: $536 per day
3. Number of days’ sales in inventory: 36.5 days
Explanation:
Inventory turnover ratio an efficiency ratio that indicates how many times a company sells and replaces its stock of goods during a particular period
Inventory turnover ratio is calculated by using following formula:
Inventory turnover ratio = Cost of Goods Sold/Average Inventory
In there:
Average Inventory = (Inventory beginning of year + Inventory end of year )/2
In the company:
Average Inventory = (20,500 + 18,628)/2 = $19,564
Inventory turnover = $195,640/$19,564 = 10 times
Average daily cost of goods sold = $195,640/365 = $536 per day
Number of days’ sales in inventory = (1/10)x365 = 36.5 days
