The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits

Question:

The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits and vegetables:

Required
1. Compute Lewis's inventory turnover ratio for 2017 and 2016.
2. Compute the number of days' sales in inventory for 2017 and 2016. Assume 360 days in a year.
3. Comment on your answers in parts (1) and (2) relative to the company's management of inventory over the two years. What problems do you see in its inventory management?

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...