xercise 13-4: The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits and vegetables: December 31 2016 2015 2014 Merchandise inventory $200,000 $150,000 $120,000 Cost of good sold 7,100,000 8,100,000 Compute Lewis’s inventory turnover ratio for 2016 and 2015. Compute the number of days’ sales in inventory for 2016 and 2015. Assume 360 days in a year. Comment on your answers in parts (1) and (2) relative to the companies management of inventory over the two years. What problems do you see in its inventory management?

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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Exercise 13-4: The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits and vegetables:

December 31

2016 2015 2014

Merchandise inventory $200,000 $150,000 $120,000 Cost of good sold 7,100,000 8,100,000

Compute Lewis’s inventory turnover ratio for 2016 and 2015.
Compute the number of days’ sales in inventory for 2016 and 2015. Assume 360 days in a year.
Comment on your answers in parts (1) and (2) relative to the companies management of inventory over the two years. What problems do you see in its inventory management?

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