Question

Selected financial information for Baird Company for Year 4 follows: Sales $ 2,450,000 Cost of goods sold 1,715,000 Merchandise inventory Beginning of year 159,000 End of year 192,000 Required Assuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during Year 4? (Round your answer to 2 decimal places.)

Answer 1

Answer:

INVENTORY TURNOVER  9,77  

Explanation:

To calculate the Inventory Turnover ratio it's necessary to calculate the average inventory of the year [($159,000+192,000)/2] , take the Total Cost of Goods ($1,715,000) and divide it by the Average Inventory ($175,500), the result it's the Inventory Turnover of the company, in this case 9,77.  

To find the days in inventory we have to divide 365 (days of the year) by the Inventory Turnover, 9,77, the result is 37 days.

 

END         START     Assets

$192,000   $159,000  Inventory  

BAIRD  

9,77         INVENTORY TURNOVER  = $1,715,000 / $175,500

$1,715,000  Cost Of Goods

$175,500  Average Inventory

37            DAYS IN INVENTORY  = 365 / 9,77