### Exercise: Days' Sales in Inventory Calculation#### Problem Statement**(4-a)** Compute days' sales in inventory. **(4-b)** For each ratio, determine if it improved or worsened in the current year.#### InstructionsComplete this question by entering your answers in the tabs below.### Tab: Required 4A#### Days’ Sales In Inventory Calculation| | Numerator | | Denominator | x | Days | = | Days’ Sales In Inventory ||---|-----------|---|-------------|---|------|---|--------------------------|| Current Year | / | | / | x | | = | Days’ sales in inventory || 1 Year Ago | / | | / | x | | = | Days |**Note:** Input your computed values to determine the days’ sales in inventory for both the current year and the previous year.### Tab: Required 4BClick to continue to the next section for further analysis.This exercise helps in understanding inventory management efficiency by calculating how many days, on average, stock remains in inventory before being sold. ### Financial Overview of Simon Company#### Year-End Balance Sheets**At December 31,**The balance sheets for Simon Company's current year and the previous two years are as follows:**Assets**- **Cash** - Current Year: $26,605 - 1 Year Ago: $31,099 - 2 Years Ago: $32,725- **Accounts Receivable, Net** - Current Year: $89,200 - 1 Year Ago: $62,900 - 2 Years Ago: $50,800- **Merchandise Inventory** - Current Year: $114,500 - 1 Year Ago: $85,000 - 2 Years Ago: $58,000- **Prepaid Expenses** - Current Year: $8,568 - 1 Year Ago: $8,163 - 2 Years Ago: $3,636- **Plant Assets, Net** - Current Year: $221,258 - 1 Year Ago: $209,503 - 2 Years Ago: $192,139**Total Assets**- Current Year: $460,131- 1 Year Ago: $396,665- 2 Years Ago: $337,300**Liabilities and Equity**- **Accounts Payable** - Current Year: $112,281 - 1 Year Ago: $65,696 - 2 Years Ago: $43,633- **Long-Term Notes Payable** - Current Year: $84,775 - 1 Year Ago: $89,408 - 2 Years Ago: $73,052- **Common Stock, $10 Par Value** - $162,500 (consistent over years)- **Retained Earnings** - Current Year: $100,575 - 1 Year Ago: $79,061 - 2 Years Ago: $58,115**Total Liabilities and Equity**- Current Year: $460,131- 1 Year Ago: $396,665- 2 Years Ago: $337,300#### Income StatementsThe income statements for the current year and one year ago are presented below, assuming all sales are on credit:**For Year Ended December 31****

Introduction: Days' sales in inventory ratio computes the number of days inventory are hold in the…

(4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Complete this question by entering your answers in the tabs below. Required 4A Required 4B Compute days' sales in inventory. Current Year: 1 Year Ago: Numerator: 1 1 1 1 Days' Sales In Inventory. Denominator: < Required 4A X X X X Days = = Required 4B Days' Sales In Inventory Days' sales in inventory > days days

(4-a) Compute days' sales in inventory. (4-b) For each ratio, determine if it improved or worsened in the current year. Complete this question by entering your answers in the tabs below. Required 4A Required 4B Compute days' sales in inventory. Current Year: 1 Year Ago: Numerator: 1 1 1 1 Days' Sales In Inventory. Denominator: < Required 4A X X X X Days = = Required 4B Days' Sales In Inventory Days' sales in inventory > days days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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