Nestlé reports beginning raw materials inventory of 4,415 and ending raw materia

Question

Nestlé reports beginning raw materials inventory of 4,415 and ending raw materials inventory of 3,700 (both numbers in millions of Swiss francs). Nestlé purchased 14,060 and used 14,775 (both amounts in millions of Swiss francs) of raw materials during the year. Compute raw materials inventory turnover and the number of days' sales in raw materials inventory. (Enter your answers in millions of Swiss francs.)

Nestlé reports beginning raw materials inventory of 4,415 and ending raw materials inventory of 3,700 (both numbers in millions of Swiss francs). Nestlé purchased 14,060 and used 14,775 (both amounts in millions of Swiss francs) of raw materials during the year. Compute raw materials inventory turnover and the number of days' sales in raw materials inventory. (Enter your answers in millions of Swiss francs.)

Explanation / Answer

Raw materials inventory turnover = raw materials used/average inventory = 14775/((4415+3700)/2)= 3.64

Number of days' sales in raw materials inventory = 365/raw materials inventory turnover = 365*ending inventory/ raw materials used = 365*3700/14775= 91.4

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