Answer:
A. 20Y7 Inventory Turnover 4.7
20Y6 Inventory Turnover=5.1
B. 20Y7 77.66 days
20Y6 71.57 days
Explanation:
A. Calculation to determine the inventory turnover for 20Y7 and 20Y6
Using this formula
Inventory Turnover = Cost of Goods Sold/Average inventory
Let plug in the formula
20Y7 Inventory Turnover=$3,894,185/[(795,700+861,400)/2]
20Y7 Inventory Turnover=$3,894,185/($1,657,100/2)
20Y7 Inventory Turnover=$3,894,185/828,550
20Y7 Inventory Turnover=4.7
20Y6 Inventory Turnover= $4,002,225/(773,800+795,700)/2]
20Y6 Inventory Turnover=$4,002,225/(1,569,500/2)
20Y6 Inventory Turnover=$4,002,225/784,750
20Y6 Inventory Turnover=5.1
B. Calculation to determine the number of days' sales in inventory for 20Y7 and 20Y6
Days in inventory = 365/Inventory Turnover
20Y7 Days in inventory=365/4.7=77.66 days
20Y6 Days in inventory=365/5.1=71.57 days