How do I solve this? Inventory Turnover and Days' Sales in InventoryThe Southern Company installed a new inventory management system at the beginning of Year 1.Shown below are data from the company's accounting records as reported by the new system:Year 1Year 2Sales revenue$8,000,000 $10,000,000Cost of goods sold4,000,0004,900,000Beginning inventory500,000530,000Ending inventory530,000600,000Calculate the company's (a) inventory turnover and (b) days' sales in inventory for both years.Round to two decimals. Use the rounded answers in your calculations.Year 1Year 2(a) Inventory turnover(b) Days' sales in inventoryCheck

The inventory turnover ratio indicates the efficiency of the management to sell out its inventory and the days sales inventory shows the days turn into the cost of sales. Year 1 Average inventory = ( $ 500,000 + $ 530,000 ) / 2 = $ 515,000 Inventory turnover = $ 4,000,000 / $ 515,000 = 7.766 or 7.77 Year 2 Average inventory = ( $ 530,000 + $ 600,000 ) / 2 = 565,000 Inventory turnover = $ 4900,000 / $ 565,000 = 8.672 or 8.67 Answer b) Days sales in inventory = 365 / inventory turnover Year 1 = 365 / 7.77 =46.975 or 46.98 Days Year 2 = 365 / 8.67 =42.099 or 42.10 Days