Question

EasyDo, Inc. presents the following data for December 31, 2018.

Inventories, beginning of year	$  906,500
Inventories, end of year	678,800
Cost of Goods Sold	5,580,000
Net Sales	7,625,500

______3. The inventory turnover in days (use average inventory) is:

a. 44.4

b. 26.8

c. 51.8

d. 37.9

e. 7.0

______4. The prior and current year results for Days’ Sales in Inventory are:

1. Using information above: Complete 2018

	2018	2017	2016
Days’ Sales in Inventory		53.8	35.9

2. T or F: This trend indicates the company is improving its efficiency and effectiveness in managing inventory from the previous year, but is not as effective as its 2016 performance.

Answer 1

3.

Average inventory = (Beginning inventory + Ending inventory)/2

= (906,500 + 678,800)/2

= 1,585,300/2

= $792,650

The inventory turnover in days = 365 x Average inventory/Cost of Goods Sold

= 365 x 792,650/5,580,000

= 51.8 days

The Correct option is (C)

4 (a)

	2018	2017	2016
Days’ Sales in Inventory	51.8	53.8	35.9

b.

This trend indicates the company is improving its efficiency and effectiveness in managing inventory from the previous year, but is not as effective as its 2016 performance.

The given statement is True.

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