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GameWorld Corp. is the world\'s largest multichannel video game retailer. The co

ID: 341172 • Letter: G

Question

GameWorld Corp. is the world's largest multichannel video game retailer. The company reported the I statements (in millions) 2013 2012 Net Sales Revenue $10,900 $10,400 7,040 6,640 2,000 1,300 2,400 2,000 Cost of Goods Sold Beginning Inventory Ending Inventory Required 1. 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.) TIP: Remember to use costs in both the numerator (CGS) and denominator (average inventory). 2013 2012 Inventory Turnover Ratio times per year times per year Days to Sell days days 2. Is GameWorld performing better than its competitor Ultimate Value where inventory turned over 3.5 times during 2013 (65 days to sell) Yes 0

Explanation / Answer

[2000+2400]/2

2200

[1300+2000]/2

1650

7040/2200

3.2 times

6640/1650

4 times

365/3.2

114.1 days

365/4

91.3days

2)No ,Gameworld is underperforming than its competitors as its inventory turnover ratio is lower and days to sell is higher.

Formula 2013 2012 Average inventory [Beginninginventory +ending inventory]/2

[2000+2400]/2

2200

[1300+2000]/2

1650

Inventory turnover cost of goods sold /Average inventory

7040/2200

3.2 times

6640/1650

4 times

days to sell 365 /inventory turnover

365/3.2

114.1 days

365/4

91.3days