Concept explainers
Concept Introduction:
Inventory Turnover Ratio:
Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:
Note: Average inventory is calculated with the help of following formula:
Day's sales in inventory:
Days sales in inventory represent the number of days the inventory waits for the sale. It is calculated using the following formula:
Days sales in inventory = 365/ Inventory Turnover Ratio
To Calculate:
Raw Material Inventory Turnover and Days Sales in Raw Material Inventory

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Chapter 18 Solutions
FUNDAMENTAL ACCOUNTING PRINCIPLES
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