Question

The following information was available for the year ended December 31, 2019:

Net sales	$	784,750
Cost of goods sold		594,950
Average accounts receivable for the year		38,300
Accounts receivable at year-end		31,200
Average inventory for the year		158,000
Inventory at year-end		157,300

Required:

1. Calculate the inventory turnover for 2019. (Round your answer to 2 decimal places.)
2. Calculate the number of days' sales in inventory for 2019, using year-end inventories. (Use 365 days a year. Round your answer to 1 decimal place.)
3. Calculate the accounts receivable turnover for 2019. (Round your answer to 1 decimal place.)
4. Calculate the number of days' sales in accounts receivable for 2019, using year-end accounts receivable. (Use 365 days a year. Round your answer to 1 decimal place.)

Answer 1

a
Cost of goods sold	594950
Divide by Average inventory for the year	158000
Inventory turnover	3.77	times
b
Inventory at year-end	157300
Divide by Average day’s cost of good sold	1630	=594950/365
Number of days' sales in inventory	96.5	days
c
Net sales	784750
Divide by Average accounts receivable	38300
Accounts receivable turnover	20.5	times
d
Accounts receivable at year-end	31200
Divide by Average day’s sales	2150	=784750/365
Number of days' sales in accounts receivable	14.5	days