Question

​Cartwright's, a​ home-improvement store​ chain, reported these summarized​ figures: ​(Click the icon to view the income​ statement.)

​(Click the icon to view the balance​ sheets.)
Compute the​ following:
a. The rate of inventory turnover for .
b. ​Days' sales in average receivables during . Assume all sales are on credit.
a. Compute the rate of inventory turnover for . First enter the​ formula, then compute the inventory turnover for . ​(Round your answer to two decimal​ places.) Cost of goods sold / Average inventory = Inventory turnover $21,766,030 / $4,433,000 = 4.91
b. Compute the d​ays' sales in average receivables during . Enter the​ formula, then compute the​ days' sales in average receivables during .
​(Round your answer to two decimal​ places.)

Answer 1

a. 4.91

b. 2.50 days

Step-by-step explanation:

a. Inventory turnover

= Cost of goods sold / Average inventory

Average inventory =( Ending inventory + Opening inventory) / 2

= (4,676,000 + 4,190,000) / 2

= $4,433,000

Inventory turnover = 21,766,030 / $4,433,000

= 4.91

b. D​ays' sales in average receivables

= Average Account Receivables / Average daily sales

Average account receivables = (Ending receivables + Opening receivables) / 2

= (100,800 + 378,500) / 2

= $239,650

Average daily Sales = Sales / 365

= 34,988,900 / 365

= $95,860

D​ays' sales in average receivables = 239,650 / 95,860

= 2.50 days