Question

The following information is available for Splish Brothers Inc. for three recent fiscal years.

		2022		2021		2020
Inventory		$580,000		$590,000		$320,000
Net sales		1,950,000		1,750,000		1,350,000
Cost of goods sold		1,462,500		1,228,500		938,000

(a)

Calculate the inventory turnover, days in inventory, and gross profit rate for 2022 and 2021. (Round inventory turnover to 1 decimal place, e.g. 5.2, days in inventory to 0 decimal places, e.g. 125 and gross profit rate to 1 decimal place, e.g. 5.2%.)

		2022			2021
Inventory Turnover			times			times
Days in Inventory			days			days
Gross Profit Rate			%			%

Answer 1

a
	2022	2021
Inventory Turnover	2.5 times	2.7 times
Days in Inventory	146 days	135 days
Gross Profit Rate	25.0%	29.8%
Workings:
	2022	2021
Cost of goods sold	1462500	1228500
Divide by Average inventory	585000	455000
Inventory Turnover	2.5	2.7
	2022	2021
Days in a year	365	365
Divide by Inventory Turnover	2.5	2.7
Days in Inventory	146	135
	2022	2021
Net sales	1950000	1750000
Less: Cost of goods sold	1462500	1228500
Gross Profit	487500	521500
Gross Profit rate	25.0%	29.8%