Calculate activity measures The following information was available for the year ended December 31 2013 Required: a.
Question:
Required:
a. Calculate the inventory turnover for 2013.
b. Calculate the number of days' sales in inventory for 2013, using year-end inventories,
c. Calculate the accounts receivable turnover for 2013.
d. Calculate the number of days' sales in accounts receivable for 2013, using year-end accounts receivable.
$730,000 584,000 Net sales Cost of goods sold Average inventories for the year 146,000 nventories at year-end....156,800 Average accounts receivable for the year.. $29,200 Accounts recelvable at year-end 32,000
Step by Step Answer:
a Calculate Inventory turnover ratio for 2013 Inventory turnover ratio is used to know the number of times inventory is sold or converted into finishe...View the full answer
Accounting What the Numbers Mean
ISBN: 978-0078025297
10th edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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