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5 January, 18:15

Haymitch Global Industries is a world leading producer of loudspeakers and other electronics products, which are sold under brand names like JRH, Excelsior, and Haymitch/Krug. The company reported the following amounts in its financial statements (in millions)

2013 2012

Net Sales $ 6,000 $ 6,060

Cost of Goods Sold 4,900 4,700

Beginning Inventory 550 470

Ending Inventory 660 550

Required:

Determine the inventory turnover ratio and average days to sell inventory for 2013 and 2012. (Use 365 days in a year. Round your intermediate and final answers to 1 decimal place.)

2013 2012

Inventory Turnover Ratiotimes per yeartimes per year

Days to Selldaysdays

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Answers (1)
  1. 5 January, 18:30
    0
    1. Inventory Turnover ratio 2013 = 8.09 Times

    Inventory Turnover ratio 2012 = 9.21 Times

    2. Days to sell 2013 = 45.11 Days

    Days to sell 2012 = 39.63 Days

    Explanation:

    Calculation for Determining the inventory turnover ratio and average days to sell inventory for 2013 and 2012.

    Haymitch Global Industries

    A. The Inventory Turnover Ratio times per year times per year

    Using this formula

    Inventory Turnover = Cost of Goods Sold / Average inventory

    2013

    Inventory Turnover ratio = 4,900/[ (550+660) / 2]

    Inventory Turnover ratio=4,900 / (1,210:2)

    Inventory Turnover ratio=4,900/605

    Inventory Turnover ratio 2013 = 8.09 Times

    2012

    Inventory Turnover ratio = 4,700/[ (470+550) / 2]

    Inventory Turnover ratio=4,700 / (1,020:2)

    Inventory Turnover ratio=4,700/510

    Inventory Turnover ratio 2012 = 9.21 Times

    Calculation for Days to Sell days

    Days to sell

    Using this formula

    Days to sell = 365/Inventory Turnover

    2013

    Days to sell = 365/8.09

    Days to sell 2013 = 45.11 Days

    2012

    Days to sell = 365/9.21

    Days to sell 2012 = 39.63 Days
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