Question

The following is information for Palmer Co.:

Answer 1

Answer:

a.

i. 4.7 times

ii. 77.1 days

b

i. 7 times

ii. 52.1 days

Explanation:

Inventory turnover = cost of goods sold / average inventory

average inventory for 2016 = ( 87,750 + 92,500 ) / 2 = $90,125

Inventory turnover $426,650 / $90,125 = 4.7 times

Days' sales in inventory = 365 / inventory turnover = 77.1 days

for 2017

inventory turnover = cost of goods sold / average inventory

average inventory for 2017 = ( 97,400 + 87,750 ) / 2 = $92,575

Inventory turnover $643,825 / $92,575 = 7.0 times

Days' sales in inventory = 365 / inventory turnover = 52.1 days