HG Lang Designs operates an exclusive bridal boutique in Manhattan. All gowns are designed by Lang but are manufactured by various small firms in France and Italy. The following financial information for the company relates to Problems 1 through 4.

Assume you are the vice president of operations of HG Lang. To prepare for a meeting with Adrienne Aiello, the company president, you are in the process of analyzing inventory.

Required
a. Compute inventory turnover and days’ sales in inventory.
b. Based on your contacts in the industry, you know that inventory turnover at similar companies is generally around seven and days’ sales in inventory is around 52. How does HG Lang’s performance compare to these averages?

Transcribed Image Text:

HG Lang Designs Balance Sheets December 31, 2009 December 31, 2008 Assets Current assets: Cash Accounts receivable Inventory Other current assets Total current assets Buildings, furniture, and fixtures, net Total assets 62,541 $ 84,584 338,652 320,378 1,725,425 59,859 2,186,477 1,548,942 $ 3,735,419 1,695,785 62,587 2,163,334 1,548,942 $ 3,712,276