FINANCIAL ACCT.FUND.(LOOSELEAF)
7th Edition
ISBN: 9781260482867
Author: Wild
Publisher: MCG
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Chapter 5, Problem 2BTN
To determine
Inventory:
Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.
Cost of Goods Sold (COGS) or Cost of Sales:
Cost of goods sold is the total expenses or the cost incurred by the business during the process of manufacturing of goods and is directly related to the production. It generally includes the cost of raw material, labor and other
Inventory Turnover Ratio:
It depicts the fraction of inventory sold or used by the company within a fiscal year. It states a ratio which shows the number of times goods were sold during an accounting period which thereby states the productivity or the efficiency level of the company regarding the inventory which apparently is the biggest asset for the company.
Days’ Sales in Inventory: It indicates the days taken up by the company to convert the stock items into actual sales.
1.
To compute: Inventory turnover.
2.
To determine
To compute: Day’s sales in inventory.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
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