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Question
The following data are taken from the financial statements:
| Current Year | Preceding Year | |
| Sales | $3,600,000 | $4,000,000 |
| Cost of merchandise sold | 2,000,000 | 2,700,000 |
| Average merchandise inventory | 372,000 | 352,000 |
a. Determine for each year:
(1) Inventory turnover (Round answer to one decimal place.)
(2) Number of days sales in inventory (Round intermediate computation to the nearest whole number and the final answer to two decimal places.)
b. What conclusions can be drawn from these data concerning the inventories?
Answer
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