GameWorld Corp. is the world\'s largest multichannel video game retailer. The co
ID: 340844 • Letter: G
Question
GameWorld Corp. is the world's largest multichannel video game retailer. The company reported the following amounts in its financial statements (in millions). Cost of Goods Sold Beginning Inventory Ending Inventory 2013 2012 Net Sales Revenue 10,400 S 9,900 6,840 6,440 1,950 1,250 2,350 1,950 Required 1. Determine the inventory turmover 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.) TIP: Remember to use costs in both the numerator (CGS) and denominator (average inventory). Inventory Turnover Ratio Days to Sell times per year times per year days days 2. Is GameWorld performing better than its competitor Ultimate Value where inventory tuned over 3.6 times during 2013 (85 days to sell). #Yes NoExplanation / Answer
Inventory turnover ratio -2013
= Cost of goods sold / average inventory
Cost of goods sold = 6840
Average inventory = 1950 + 2350 / 2 = 2150
Inventory Turnover Ratio = 6840 / 2150 = 3.18
Days sales in inventory = Ending inventory / cost of goods sold x 365
= 2350 / 6840 x 365 = 126 days
Inventory Turnover Ratio - 2012
Cost of goods sold = 6440
Average inventory = 1250 + 1950 / 2 = 2225
Inventory Turnover Ratio = 6440 / 2225 = 2.89
Days sale in inventory = 1950 / 6440 x 365 = 111 Days
2.Ultimately gameorld performing better than competitor, hen ITR = 3.6 and the time period is 65 days
= 1950 + 6440/ 65 Dayas = 20 days
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