Inventory Analysis

The following data were extracted from the income statement of Brecca Systems Inc.:

	Current Year		Preceding Year
Sales	$1,290,275		$1,161,105
Beginning inventories	155,275		140,275
Cost of goods sold	737,300		703,700
Ending inventories	128,275		155,275

a. (1). Determine for each year the inventory turnover. Round to one decimal place.

Current year
Preceding year

(2). Determine for each year the number of days' sales in inventory. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place.

Current year	days
Preceding year	days

b. What conclusions can be drawn from the data concerning the inventories? Inventory increased faster than sales volume, resulting in a deteriorating inventory position.