The following account balances are taken from the records of Lewis Inc., a wholesaler of fresh fruits

Question:

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

December 31 2013 2014 2012 Merchandise inventory $200,000 $150,000 $120,000 2014 2013 Cost of goods sold $7,100,000 $8,1

Required
1. Compute Lewis€™s inventory turnover ratio for 2014 and 2013.
2. Compute the number of days€™ sales in inventory for 2014 and 2013. Assume 360 days in a year.
3. Comment on your answers in parts (1) and (2) relative to the company€™s management of inventory over the two years. What problems do you see in its inventory management?

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...

Fantastic news! We've Found the answer you've been seeking!