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Cengage CengageNOW2 Online tea X Y coarse hero . Yahoo Search F × Homework Help . Q&A; from × © Cengage E-C-X Cengage + ¢v2.cengagenow.com/ilrntakeAssignment/takeAssignmentMain.do?!nvoker-... asearch Question 1 1 pt Inventory Turnover and Days' Sales In Inventory The following financial statement data for years ending December 31 for Holland Company are shown below 20Y4 20Y3 Cost of merchandise sold $1,007,400 $640,794 Inventorles: Beginning of year $179,580 $125,560 End of year 258,420 179,580 a. Determine the inventory turnover for 20Y4 and 20Y3. Round to one decimal place. Inventory Turnover 20Y4 20Y3 b. Determine the days' sales In Inventory for 20Y4 and 20Y3. Assume 365 days a year. Round Interlm calculations and final answers to one decimal place. Days' Sales in Inventory 20Y4 days 20Y3 days c. Does the change in inventory turnover and the days' sales in inventory from 20Y3 to 20Y4 indicate a favorable or an unfavorable trend? Save and Exit Submit Assignment for Grading e Learning 11:10 AM Type here to search 97 11/15/2017 11

Explanation / Answer

Inventory turnover from 20Y3 to 20Y4 has increase which is a favorable event as the inventory has converted into cash more number of times in 20Y4 then in 20Y3

Similarly, Days' sales in inventory has fallen which means it is taking less time to convert inventory into sales which is a favorable event

Calculations Particulars 20Y4 20Y3 A Cost of merchandise sold    1,007,400    640,794 Inventories B Beginning of year       179,580    125,560 C End of year       258,420    179,580 D = (B + C) / 2 Average Inventory       219,000    152,570 E = A / D Inventory Turnover (Times)                 4.6             4.2 F = 365 / E Days' sales in Inventory              79.3           86.9

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