Question

Haymitch Global Industries is a world leading producer of loudspeakers and other electronics products, which are sold under brand names like JRH, Excelsior, and Haymitch/Krug. The company reported the following amounts in its financial statements (in millions)

2013 2012
Net Sales $ 6,000 $ 6,060
Cost of Goods Sold 4,900 4,700
Beginning Inventory 550 470
Ending Inventory 660 550
Required:
Determine the inventory turnover ratio and average days to sell inventory for 2013 and 2012. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.)
2013 2012
Inventory Turnover Ratiotimes per yeartimes per year
Days to Selldaysdays

Answer 1

1.Inventory Turnover ratio 2013= 8.09 Times

Inventory Turnover ratio 2012= 9.21 Times

2.Days to sell 2013= 45.11 Days

Days to sell 2012= 39.63 Days

Step-by-step explanation:

Calculation for Determining the inventory turnover ratio and average days to sell inventory for 2013 and 2012.

Haymitch Global Industries

A. The Inventory Turnover Ratio times per year times per year

Using this formula

Inventory Turnover = Cost of Goods Sold /Average inventory

2013

Inventory Turnover ratio= 4,900/[(550+660)/2]

Inventory Turnover ratio=4,900/(1,210÷2)

Inventory Turnover ratio=4,900/605

Inventory Turnover ratio 2013= 8.09 Times

2012

Inventory Turnover ratio= 4,700/[(470+550)/2]

Inventory Turnover ratio=4,700/(1,020÷2)

Inventory Turnover ratio=4,700/510

Inventory Turnover ratio 2012= 9.21 Times

Calculation for Days to Sell days

Days to sell

Using this formula

Days to sell = 365/Inventory Turnover

2013

Days to sell= 365/8.09

Days to sell 2013= 45.11 Days

2012

Days to sell = 365/9.21

Days to sell 2012= 39.63 Days