Inventory Turnover and Number of Days' Sales in Inventory
The following financial statement data for years ending December 31 for Gillispie Company are shown below.
| |
2016 |
2015 |
| Cost of merchandise sold |
$776,720 |
|
|
$498,225 |
|
|
| Inventories: |
|
|
|
|
|
|
| Beginning of year |
$167,900 |
|
|
$116,800 |
|
|
| End of year |
240,900 |
|
|
|
167,900 |
|
|
a. Determine the inventory turnover for 2016 and 2015. Round to one decimal place.
| Inventory Turnover |
| 2016 |
| 2015 |
b. Determine the number of days' sales in inventory for 2016 and 2015. Assume 365 days a year. Round interim calculations and final answers to one decimal place.
| Number of Days' Sales in Inventory |
| 2016 |
days |
| 2015 |
days |
c. Does the change in inventory turnover and the number of days' sales in inventory from 2015 to 2016 indicate a favorable or an unfavorable trend?