Inventory Analysis

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

	Current Year		Previous Year
Sales	$12,750,000		$13,284,000
Beginning inventories	840,000		800,000
Cost of goods sold	6,375,000		7,380,000
Ending inventories	860,000		840,000

a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume 365 days a year.

	Current Year	Previous Year
1. Inventory turnover	______	_______
2. Number of days' sales in inventory	______ days	_______ days

b. The inventory position of the business has_____ . The inventory turnover has ______ , while the number of days' sales in inventory has ______ . The sales volume has ______ faster than the inventory has ______ , thus resulting in the _________ inventory position.