Inventory Analysis The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits and vegetables:

Required 1. Compute Lewis’s inventory turnover ratio for 2008 and 2007.
2. Compute the number of days’ sales in inventory for 2008 and 2007. Assume 360 days in a year.
3. Comment on your answers in (1) and (2) relative to the company’s management of inventory over the two years. What problems do you see in its inventory management?

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December 31 2008 2007 2006 Merchandise inventory $ 200,000 $ 150,000 $120,000 2008 2007 Cost of goods sold $7,100,000 $8,100,000