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 inventory turnover for 2016 and 2015.
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 inventory turnover for 2016 and 2015.
Solution Summary: The author explains the inventory turnover ratio, which is used to determine the number of times inventory used or sold during the particular accounting period.
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
inventory turnover for 2016 and 2015.
(b)
To determine
Days’ sales in inventory ratio for 2016 and 2015.
(c)
To determine
To explain: if change in turnover and days’ sales in inventory from 2015 to 2016 indicate favorable or unfavorable trend.
Year
0123
Cash Flow
-$ 19,000
11,300
10,200
6,700
a. What is the profitability index for the set of cash flows if the relevant discount rate is 11 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
b. What is the profitability index for the set of cash flows if the relevant discount rate is 16 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
c. What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
a. Profitability index
b. Profitability index
c. Profitability index
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.