27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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 to the nearest dollar and one decimal place.

b. What conclusions can be drawn from these data concerning the inventories?


To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

To compute: Inventory turnover ratio and number of days’ sales in inventory

Given info:(1) Cost of goods sold and (2) average inventory


Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period.



To determine

To conclude: Position of inventory.

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