Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows: Inventory turnover = Cost of goods sold Average inventory Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows: Days' sales in inventory = Days in accounting period Inventory turnover To determine: the inventory turnover for Company A and Company AG.
Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows: Inventory turnover = Cost of goods sold Average inventory Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows: Days' sales in inventory = Days in accounting period Inventory turnover To determine: the inventory turnover for Company A and Company AG.
Solution Summary: The author explains the inventory turnover ratio for Company A and Company AG.
Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:
Inventory turnover=Cost of goods soldAverage inventory
Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows:
Days' sales in inventory=Days in accounting periodInventory turnover
To determine: the inventory turnover for Company A and Company AG.
(b)
To determine
To explain: Whether the inventory turnover of Company AG should be higher or lower than the Company A.
IF THE GOVERNMENT COLLECTS MORE IN TAX REVENUE THAN IT SPENDS,
AND HOUSEHOLDS CONSUME MORE THAN THEY GET IN AFTER-TAX INCOME:
A. PRIVATE AND PUBLIC SAVING ARE BOTH POSITIVE.
B. PRIVATE AND PUBLIC SAVING ARE BOTH NEGATIVE.
C. PRIVATE SAVING IS NEGATIVE, BUT PUBLIC SAVING IS POSITIVE.
D. PRIVATE SAVING IS POSITIVE, BUT PUBLIC SAVING IS NEGATIVE.
Jones Company is preparing the financial statement dated December
31 of the current year. Ending inventory information.
Unit Cost When Net Realizable Value
Ite Quantity
m
onHand
Acquired
(Market) at Year-End
A
69
$ 20
$ 23
B
99
48
38
29
60
56
D
89
38
33
E
369
13
18
Required
1. Compute the valuation that should be used the current year ending
inventory using the LCM rule applied on an item-by-item basis.
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