Question

Harman International Industries is a world-leading producer of loudspeakers and other electronics products, which are sold under brand names like JBL, Infinity, and Harman/Kardon. The company reported the following amounts in its financial statements (in millions): 2016 2015 Net Sales $ 6,910 $ 6,155 Cost of Goods Sold 4,820 4,340 Beginning Inventory 695 665 Ending Inventory 705 695 Required: Determine the inventory turnover ratio and average days to sell inventory for 2016 and 2015. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.)

Answer 1

Inventory Turnover Ratio

2016 --- 6.9

2015 --- 6.4

Average Days To Sell Inventory

2016 --- 53

2015 --- 57.2

Step-by-step explanation:

The formula to calculate Inventory Turnover Ratio is as follows:

Cost of Goods Sold / Average Inventory

where Average Inventory = (Opening Stock + Closing Stock) / 2

Whereas, 365 is divided by Inventory Turnover Ratio to get the number of days it takes to sell inventory.

I've attached a screenshot of my workings, it will be helpful. Thanks!