SCC Co. reported the following for the current year:

Net sales $ 59,000

Cost of goods sold $ 48,800

Beginning balance in inventory $ 3,100

Ending balance in inventory $ 9,100

Compute (a) inventory turnover and (b) days' sales in inventory.

Hint: Recall that inventory turnover uses average inventory, and days' sales in inventory uses the ending balance in inventory."

Question

Business

Cristofer Mccarty

29 February, 07:00

SCC Co. reported the following for the current year:

Net sales $ 59,000

Cost of goods sold $ 48,800

Beginning balance in inventory $ 3,100

Ending balance in inventory $ 9,100

Compute (a) inventory turnover and (b) days' sales in inventory.

Hint: Recall that inventory turnover uses average inventory, and days' sales in inventory uses the ending balance in inventory."

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Answers (1)

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Byrd · Answer 1

a. The inventory turnover is 8.00 times

b. The days' sales in inventory is 68 days

Explanation:

a. In order to calculate the inventory turnover we would have to use the following formula:

inventory turnover=cost of goods sold/average inventory

inventory turnover=$ 48,800 / ($3,100+$ 9,100) / 2

inventory turnover=8.00 times

b. In order to calculate thedays' sales in inventory we would have to use the following formula:

days' sales in inventory = (Ending invenory/cost of goods sold) * 365

days' sales in inventory = ($9,100/$48,800) * 365

days' sales in inventory=68 days