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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows: I n v e n t o r y T u r n o v e r R a t i o = C o s t o f g o o d s s o l d A v e r a g e i n v e n t o r y Note: Average inventory is calculated with the help of following formula: A v e r a g e i n v e n t o r y = ( B e g i n n i n g i n v e n t o r y + E n d i n g i n v e n t o r y ) 2 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: D a y S a l e s i n I n v e n t o r y = I n v e n t o r y * 365 C o s t o f G o o d s S o l d To Choose: The measure useful in evaluating efficiency in the management of inventories.

Question

Want to see the full answer?

Answer 1

Question

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

What is the profit margin ratio on this general accounting question?

Abc corporation allocates overhead solve this question

answer?? Financial accounting questions

Answer 2

Question

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Answer 6

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Answer 7

Chapter 9, Problem 5SEQ

To determine

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 the Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

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:

Day Sales in Inventory = Inventory *365Cost of Goods Sold

To Choose:

The measure useful in evaluating efficiency in the management of inventories.

Answer 8

Expert Solution & Answer

Answer 9

Expert Solution & Answer

Answer 10

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 11

Ch. 9 - What type of analysis is indicated by the...Ch. 9 - Which of the following measures indicates the...Ch. 9 - Prob. 3SEQ Ch. 9 - Prob. 4SEQ Ch. 9 - Prob. 5SEQ Ch. 9 - That is the difference between horizontal and...Ch. 9 - Prob. 2CDQ Ch. 9 - Prob. 3CDQ Ch. 9 - Prob. 4CDQ Ch. 9 - How would the current and quick ratios of a...

Solution Summary: The author explains that Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales.

Want to see the full answer?

Chapter 9 Solutions