Happy Valley Homecare Suppliers, Inc. (HVHS), had $20 million in sales in 2015. Its cost of goods sold was $8 million, and its average inventory balance was $2 million.
a. Calculate the average number of days inventory outstanding ratios for HVHS.
b. The average days of inventory in the industry is 73 days. By how much would HVHS reduce its investment in inventory if it could improve its inventory days to meet the industry average?