The cost of goods sold computations for Alpha Company and Omega Company are shown below. Alpha Company Omega Company Beginning inventory $ 49,500 $ 71,000 Cost of goods purchased 200,000 299,000 Cost of goods available for sale 249,500 370,000 Ending inventory 57,000 73,000 Cost of goods sold $192,500 $297,000

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

Cost of goods purchased $200,000 $299,000

Cost of goods available

for sale $249,500 $370,000

Ending inventory $57,000 $73,000

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