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AccountingAccounting (Text Only)26th Edition

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Chapter 7, Problem 7.21EX
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 7.1APE
Problem 7.1BPE
Problem 7.2APE
Problem 7.2BPE
Problem 7.3APE
Problem 7.3BPE
Problem 7.4APE
Problem 7.4BPE
Problem 7.5APE
Problem 7.5BPE
Problem 7.6APE
Problem 7.6BPE
Problem 7.7APE
Problem 7.7BPE
Problem 7.8APE
Problem 7.8BPE
Problem 7.1EX
Problem 7.2EX
Problem 7.3EX
Problem 7.4EX
Problem 7.5EX
Problem 7.6EX
Problem 7.7EX
Problem 7.8EX
Problem 7.9EX
Problem 7.10EX
Problem 7.11EX
Problem 7.12EX
Problem 7.13EX
Problem 7.14EX
Problem 7.15EX
Problem 7.16EX
Problem 7.17EX
Problem 7.18EX
Problem 7.19EX
Problem 7.20EX
Problem 7.21EX
Problem 7.22EX
Problem 7.23EX
Problem 7.24EX
Problem 7.25EX
Problem 7.26EX
Problem 7.27EX
Problem 7.28EX
Problem 7.1APR
Problem 7.2APR
Problem 7.3APR
Problem 7.4APR
Problem 7.5APR
Problem 7.6APR
Problem 7.7APR
Problem 7.1BPR
Problem 7.2BPR
Problem 7.3BPR
Problem 7.4BPR
Problem 7.5BPR
Problem 7.6BPR
Problem 7.7BPR
Problem 7.1CP
Problem 7.2CP
Problem 7.3CP
Problem 7.4CP
Problem 7.5CP
Problem 7.6CP
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
82 views

Inventory turnover and number of days' sales in inventory

Kroger, Safeway Inc. , and Whole Foods Markets, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory information:

Chapter 7, Problem 7.21EX, Inventory turnover and number of days' sales in inventory Kroger, Safeway Inc. , and Whole Foods , example 1

The cost of goods sold for each company was:

Chapter 7, Problem 7.21EX, Inventory turnover and number of days' sales in inventory Kroger, Safeway Inc. , and Whole Foods , example 2

a. Determine the number of days’ sales in inventory (use 365 days and round to the nearest day) and the inventory turnover (round to one decimal place) for the three companies.

b. Interpret your results in p art (a).

c. If Kroger had Whole Foods’ number of days’ sales in inventory, how much additional cash flow (rounded to nearest million) would have been generated from the smaller inventory relative to its actual average inventory position?

a)

To determine

Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:

Inventory turnover=Cost of goods soldAverage inventory

Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows:

Days' sales in inventory=Days in accounting periodInventory turnover

the inventory turnover for Company K, Company S and Company W

Explanation

The inventory turnover ratio is calculated by dividing cost of goods sold by average inventory during the period. The average inventory is calculating by dividing beginning inventory and ending inventory by 2...

b)

To determine

To interpret: the above calculated ratios.

c)

To determine

The amount of cash flow that would have been generated if Company K had Company W’s number of day’s sales in inventory.

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Ch-7 P-1DQCh-7 P-2DQCh-7 P-3DQCh-7 P-4DQCh-7 P-5DQCh-7 P-6DQCh-7 P-7DQCh-7 P-8DQCh-7 P-9DQCh-7 P-10DQ
Ch-7 P-7.1APECh-7 P-7.1BPECh-7 P-7.2APECh-7 P-7.2BPECh-7 P-7.3APECh-7 P-7.3BPECh-7 P-7.4APECh-7 P-7.4BPECh-7 P-7.5APECh-7 P-7.5BPECh-7 P-7.6APECh-7 P-7.6BPECh-7 P-7.7APECh-7 P-7.7BPECh-7 P-7.8APECh-7 P-7.8BPECh-7 P-7.1EXCh-7 P-7.2EXCh-7 P-7.3EXCh-7 P-7.4EXCh-7 P-7.5EXCh-7 P-7.6EXCh-7 P-7.7EXCh-7 P-7.8EXCh-7 P-7.9EXCh-7 P-7.10EXCh-7 P-7.11EXCh-7 P-7.12EXCh-7 P-7.13EXCh-7 P-7.14EXCh-7 P-7.15EXCh-7 P-7.16EXCh-7 P-7.17EXCh-7 P-7.18EXCh-7 P-7.19EXCh-7 P-7.20EXCh-7 P-7.21EXCh-7 P-7.22EXCh-7 P-7.23EXCh-7 P-7.24EXCh-7 P-7.25EXCh-7 P-7.26EXCh-7 P-7.27EXCh-7 P-7.28EXCh-7 P-7.1APRCh-7 P-7.2APRCh-7 P-7.3APRCh-7 P-7.4APRCh-7 P-7.5APRCh-7 P-7.6APRCh-7 P-7.7APRCh-7 P-7.1BPRCh-7 P-7.2BPRCh-7 P-7.3BPRCh-7 P-7.4BPRCh-7 P-7.5BPRCh-7 P-7.6BPRCh-7 P-7.7BPRCh-7 P-7.1CPCh-7 P-7.2CPCh-7 P-7.3CPCh-7 P-7.4CPCh-7 P-7.5CPCh-7 P-7.6CP

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