Question

Suppose at December 31 of a recent year, the following information (in thousands) was available for sunglasses manufacturer Oakley Inc.: ending inventory $170,000; beginning inventory $125,000; cost of goods sold $351,050 and sales revenue $761,000.

a. Calculate the inventory turnover for Oakley, Inc.
b. Calculate the days in inventory for Oakley, Inc.

Answer 1

Answer and Explanation:

The computation is shown below:

a. The inventory turnover is

= Cost of Goods Sold ÷ Average Inventory

= $351,050 ÷ ($170,000 + $125,000) ÷ 2

= $351,050 ÷ $147,500

= 2.38 times

b. Now days in inventory is

= 365 ÷ inventory turnover ratio

= 365 ÷ 2.38 times

= 153.36 days