Asked by Veronica Krall on Apr 27, 2024
Verified
At December 31 2016 the following information was available for Deen Company: ending inventory $22600; beginning inventory $21400; cost of goods sold $171000; and sales revenue $430000.
Calculate the inventory turnover and days in inventory for Deen.
Inventory Turnover
A measure showing the frequency at which a company's inventory is sold and replenished within a given timeframe.
Days in Inventory
A financial metric that calculates the average number of days a company holds inventory before it is sold.
- Identify and calculate key inventory ratios and their significance in evaluating a company's performance.
Verified Answer
SH
Syatti HasyyatiApr 28, 2024
Final Answer :
Inventory Turnover = $171000 ÷ [($21400 + $22600) ÷ 2] = 7.8 times
Days in Inventory = 365 ÷ 7.8 = 46.8 days
Days in Inventory = 365 ÷ 7.8 = 46.8 days
Learning Objectives
- Identify and calculate key inventory ratios and their significance in evaluating a company's performance.
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