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Inventory turnover and number of days sales in inventory
Financial statement data for years ending December 31 for Tango Company follow:
| | 20Y7 | 20Y6 |
| Cost of goods sold | $3,864,000 | $4,001,500 |
| Inventories: | | |
| Beginning of year | 770,000 | 740,000 |
| End of year | 840,000 | 770,000 |
Required
a. Determine the inventory turnover for 20Y7 and 20Y6. Round to one decimal place.
| | 20Y7 | 20Y6 |
| Inventory turnover | fill in the blank 1 | fill in the blank 2 |
b. Determine the number of days sales in inventory for 20Y7 and 20Y6. Use 365 days and round to one decimal place.
| | 20Y7 | 20Y6 |
| Number of days sales in inventory | fill in the blank 3 days | fill in the blank 4 days |
c. Are the changes in inventory turnover and the number of days sales in inventory from 20Y6 to 20Y7 favorable or unfavorable?
FavorableUnfavorable
Answer & Explanation
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