Question

Danube reported the following amounts in its financial statements (in millions): 2015 2014 Net Sales $ 80,000 $ 67,000 Cost of Goods Sold 65,000 52,000 Beginning Inventory 6,000 4,300 Ending Inventory 7,800 6,000 Required: Determine the inventory turnover ratio and average days to sell inventory for 2015 and 2014. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.)

Answer 1

2014:

Inventory TO 10.10

Days outstanding: 36

2015:

Inventory TO 9.42

Days on Inventory 39

Step-by-step explanation:

2014:

`(Sales)/(Average Inventory) = $Inventory Turnover`

​where:

`$$Average Inventory=(Beginning Inventory + Ending Inventory)/2`

COGS 52,000

beginning: 4,300

ending: 6,000

`$$Average Inventory=4300 + 6000)/2`

Average Inventory 5, 150

`(52,000)/(5,150) = $Inventory Turnover`

Inventory TO 10.09708738

`(365)/(Inventory TO) = $Days on Inventory`

`(365)/(10.0970873786408) = $Days on Inventory`

Days on Inventory 36

2015:

COGS: 65,000

beginning: 6,000

ending: 7,800

`$$Average Inventory=6000 + 7800)/2`

Inventory 6900

`(65000)/(6900) = $Inventory Turnover`

Inventory TO 9.420289855

`(365)/(Inventory TO) = $Days on Inventory`

`(365)/(9.42028985507246) = $Days on Inventory`

Days on Inventory 39