Problem 3 (10%) A leading U.S. retailer, TJX, reported the following in $millions for the months of May, June, and July (its second quarter): Sales revenue Cost of goods sold Average inventory Quarter 2. 2020 $6,668 5,174 4,345 Quarter 2, 2019 $9,782 7,026 5,072 A. Without calculating the days' sales in inventory (DST) just yet, explain why that calculation should use the cost of goods sold amount rather than the sales revenue amount, even though the ratio is called days' sales in inventory. B. A friend referenced the first page of the Analysis of Inventory lecture notes and calculated the following for days' sales in inventory (DSI): Quarter 2, 2020: $4,345 / ($5,174/365) = $4,345 / $14.175 = 306.5 DSI Quarter 2, 2019: $5,072 / ($7,026/365) = $5,072 / $19.249) = 263.4 DSI A neighbor, who happens to be an accounting expert, is not surprised that DSI was higher in 2020 (COVID-19), but she questions your friend's calculations: "I know your friend has a good calculator and I assume your professor was awake when he provided the formula for DSI in the lecture notes, but the DSIs for both Quarter 2 of 2020 and Quarter 2 of 2019 were actually very different from those calculated by your friend." In the space below, calculate correct DSIs for: Quarter 2, 2020: DSI Quarter 2, 2019 DSI Problem 3 (10%) A leading U.S. retailer, TJX, reported the following in $millions for the months of May, June, and July (its second quarter): Sales revenue Cost of goods sold Average inventory Quarter 2. 2020 $6,668 5,174 4,345 Quarter 2, 2019 $9,782 7,026 5,072 A. Without calculating the days' sales in inventory (DST) just yet, explain why that calculation should use the cost of goods sold amount rather than the sales revenue amount, even though the ratio is called days' sales in inventory. B. A friend referenced the first page of the Analysis of Inventory lecture notes and calculated the following for days' sales in inventory (DSI): Quarter 2, 2020: $4,345 / ($5,174/365) = $4,345 / $14.175 = 306.5 DSI Quarter 2, 2019: $5,072 / ($7,026/365) = $5,072 / $19.249) = 263.4 DSI A neighbor, who happens to be an accounting expert, is not surprised that DSI was higher in 2020 (COVID-19), but she questions your friend's calculations: "I know your friend has a good calculator and I assume your professor was awake when he provided the formula for DSI in the lecture notes, but the DSIs for both Quarter 2 of 2020 and Quarter 2 of 2019 were actually very different from those calculated by your friend." In the space below, calculate correct DSIs for: Quarter 2, 2020: DSI Quarter 2, 2019 DSI