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25 May, 17:05

The January 28, 2017 (fiscal year 2016) financial statements of Caleres, Inc. reported the following information (in thousands) : 2016 2015 Cost of sales $1,517,397 $1,529,527 Inventories, net 585,764 546,745 LIFO reserve 4,345 4,094 The 2016 average days inventory outstanding is: A. 136.2 days B. 133.9 days C. 121.5 days D. 49.6 days E. None of the above

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  1. 25 May, 17:44
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    A. 136.2 days

    Explanation:

    To compute the average days inventory outstanding, first, we have to find out the inventory turnover ratio

    Inventory turnover ratio = Cost of goods sold : average inventory

    where,

    Average inventory = (Opening balance of inventory + ending balance of inventory) : 2

    = ($546,745 + $585,764) : 2

    = $566,254

    And, the cost of good sold is $1,517,397

    Now put these values to the above formula

    So, the answer would be equal to

    = $1,517,397 : $566,254.50

    = 2.67 times

    Now, Days in inventory = Total number of days in a year : inventory turnover ratio

    = 365 days : 2.67 times

    = 136.70 days approx
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