Tater and Pepper Corp. reported sales for 2018 of $24 million. Tater and Pepper listed $5.7 million of inventory on its balance sheet. How many days did Tater and Pepper's inventory stay on the premises? (Use 365 days a year. Round your answer to 2 decimal places.) Days' sales in inventory days How many times per year did Tater and Pepper's inventory turn over? (Round your answer to 2 decimal places.) Inventory turnover times ces
Tater and Pepper Corp. reported sales for 2018 of $24 million. Tater and Pepper listed $5.7 million of inventory on its balance sheet. How many days did Tater and Pepper's inventory stay on the premises? (Use 365 days a year. Round your answer to 2 decimal places.) Days' sales in inventory days How many times per year did Tater and Pepper's inventory turn over? (Round your answer to 2 decimal places.) Inventory turnover times ces
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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![**Overview of Inventory Metrics for Tater and Pepper Corp.**
For the fiscal year 2018, Tater and Pepper Corp. reported sales totaling $24 million. The company listed $5.7 million of inventory on its balance sheet. In analyzing inventory management, two key metrics are calculated:
1. **Days' Sales in Inventory:**
- This metric indicates the average number of days that inventory remains in stock before being sold.
- Formula: \[ \text{Days' Sales in Inventory} = \frac{365}{\text{Inventory Turnover}}\]
- Calculation is based on using 365 days a year. The answer should be rounded to two decimal places for precision.
2. **Inventory Turnover:**
- This metric measures how many times the inventory is sold and replaced over a year.
- Formula: \[ \text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}} \]
- The result is the number of times inventory is processed in the accounting period, providing insights into sales efficiency.
Both these metrics are crucial for understanding inventory health and the efficiency of sales strategies. Management can use this information to make informed decisions about purchasing, sales pacing, and production planning.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F504f9a44-b97f-4fd5-a72d-264d10f13ba2%2F3b2d112c-5ed1-4a44-acaf-04a2b47a9dc3%2Fq22kro_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Overview of Inventory Metrics for Tater and Pepper Corp.**
For the fiscal year 2018, Tater and Pepper Corp. reported sales totaling $24 million. The company listed $5.7 million of inventory on its balance sheet. In analyzing inventory management, two key metrics are calculated:
1. **Days' Sales in Inventory:**
- This metric indicates the average number of days that inventory remains in stock before being sold.
- Formula: \[ \text{Days' Sales in Inventory} = \frac{365}{\text{Inventory Turnover}}\]
- Calculation is based on using 365 days a year. The answer should be rounded to two decimal places for precision.
2. **Inventory Turnover:**
- This metric measures how many times the inventory is sold and replaced over a year.
- Formula: \[ \text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}} \]
- The result is the number of times inventory is processed in the accounting period, providing insights into sales efficiency.
Both these metrics are crucial for understanding inventory health and the efficiency of sales strategies. Management can use this information to make informed decisions about purchasing, sales pacing, and production planning.
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