Answer:
Alpha Company:
- inventory turnover ratio = 3.62
- days in inventory = 101 days
Omega Company
- inventory turnover ratio = 4.13
- days in inventory = 89 days
Explanation:
Alpha Company Omega Company
Beginning inventory $49,500 $71,000
<u>Cost of goods purchased $200,000 $299,000 </u>
Cost of goods available
for sale $249,500 $370,000
<u>Ending inventory $57,000 $73,000 </u>
Cost of goods sold $192,500 $297,000
inventory turnover rate = cost of goods sold / the average inventory
average inventory = (beginning inventory + ending inventory) / 2
days in inventory = 365 days / inventory turnover ratio
Alpha Company Omega Company
average inventory $53,250 $72,000
inventory turnover $192,500 / $53,250 $297,000 / $72,000
= 3.62 = 4.13
days in inventory 365 / 3.62 365 / 4.13
= 100.83 ≈ 101 days = 88.38 ≈ 89 days
