Inventory Analysis The following data were extracted from the income statement of Keever Inc.: ...
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Accounting
Inventory Analysis
The following data were extracted from the income statement of Keever Inc.:
Current Year
Previous Year
Sales
$18,500,000
$20,000,000
Beginning inventories
940,000
860,000
Cost of goods sold
9,270,000
10,800,000
Ending inventories
1,120,000
940,000
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 deteriorated . The inventory turnover has decreased , while the number of days' sales in inventory has increased . The sales volume has declined faster than the inventory, resulting in a deteriorating inventory position.
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