Question

The top corporation has ending inventory of $426,287, and cost of goods sold for the year just ended was $4,738,216. What is the inventory turnover? The days’ sales in inventory? How long on average did a unit of inventory sit on the shelf before it was sold?

Answer 1

To calculate the inventory turnover, we divide the cost of goods sold by the average inventory, but since the beginning inventory is not given, we cannot calculate it. Therefore, we cannot calculate the days' sales in inventory or the average duration a unit of inventory sits on the shelf before it is sold.

Step-by-step explanation:

To calculate the inventory turnover, we can use the formula: Inventory turnover = Cost of goods sold / Average inventory.

The cost of goods sold is given as $4,738,216. To find the average inventory, we need to add the beginning inventory and ending inventory and divide by 2. Since the beginning inventory is not given, we cannot calculate the average inventory, and therefore cannot calculate the inventory turnover.

The days' sales in inventory can be calculated using the formula: Days' Sales in Inventory = 365 / Inventory turnover. Since we were unable to calculate the inventory turnover, we cannot calculate the days' sales in inventory as well.

The average duration a unit of inventory sits on the shelf before it is sold is given by the formula: Days in a year / Inventory turnover. Since we were unable to calculate the inventory turnover, we cannot calculate the average duration either.