Question

Exercise 6-11 a-c

Suppose this information is available for PepsiCo, Inc. for 2020, 2021, and 2022.

(in millions)		2020		2021		2022
Beginning inventory		$2,100		$2,600		$2,900
Ending inventory		2,600		2,900		3,000
Cost of goods sold		22,795		26,400		26,255
Sales revenue		41,000		44,000		43,980

Calculate the inventory turnover for 2020, 2021, and 2022. (Round inventory turnover to 1 decimal place, e.g. 5.1.)

		2020			2021			2022
Inventory turnover		enter an inventory turnover	times		enter an inventory turnover	times		enter an inventory turnover	times

Calculate the days in inventory for 2020, 2021, and 2022. (Round days in inventory to 1 decimal place, e.g. 5.1.)

		2020			2021			2022
Days in inventory		enter a number of days	days		enter a number of days	days		enter a number of days	days

Calculate the gross profit rate for 2020, 2021, and 2022. (Round gross profit rate to 1 decimal place, e.g. 5.1%.)

		2020		2021		2022
Gross profit rate		enter percentages %		enter percentages %		enter percentages %

Answer 1

Inventory Turnover = Cost of Goods Sold /Average inventory

	2020	2021	2022
Inventory Turnover	= 22795/[(2100+2600)/2] = 9.7	= 26400/[(2600+2900)/2] = 9.6	= 26255/[(2900+3000)/2] = 8.9

Days in inventory = 365/Inventory Turnover

	2020	2021	2022
Days in inventory	= (365/9.7) = 37.6 days	= (365/9.6) = 38 days	= (365/8.9) = 41 days

Gross profit rate = Gross Profit/Sales

	2020	2021	2022
Gross profit rate	= (41,000-22,795)/41,000 = 44.4%	= (44,000-26,400)/44,000 = 40%	= (43980-26255)/43980 = 40.3%