Question

Suppose this information (in millions) is available for the Automotive and Other Operations Divisions of General Motors Corporation for a recent year. General Motors Corporation uses the LIFO inventory method.

Beginning inventory		$ 13,617
Ending inventory		14,593
LIFO reserve		1,530
Current assets		64,654
Current liabilities		68,889
Cost of goods sold		168,366
Sales revenue		179,603

(a)

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Calculate the inventory turnover and days in inventory. (Round answers to 1 decimal place, e.g. 5.1.)

The inventory turnover		enter a number of times	times
Days in inventory		enter a number of days	days

Answer 1

By assuming Beginning and Ending Inventory is net of LIFO method, means adjustment had been made by passing contra entry:

Inventory Turnover= Cost of Goods Sold / Average Inventory

= 11.9 times

For Average Inventory formula is: Beginning Inventory+ Ending Inventory

2

= 13617 + 14593

2

= 14105

To calculate Inventory Turnover in days formula is:-Average Inventory/ Cost of Goods Sold * 365

= 14105 / 168366 * 365

= 30.6 days

The inventory turnover In times:- 11.9 times
Days in inventory :-. 30.6 days