Information on the activities of Strategy Furniture Ltd. is as follows:

Required

a. Do a trend analysis of the inventory turnover for each year. Also calculate the days to sell inventory ratio for the respective years.

b. Is Strategy Furniture Ltd. managing its inventory efficiently? Do you have enough information to answer this question? If not, what else do you need to know?

c. Provide an example of a situation where management may deliberately increase inventory turnover, but not be operating in the company’s best long-term interests.

Transcribed Image Text:

2016 2017 2018 2019 2020 Cost of goods sold $1,948,492 $1,856,820 $1,644,300 $1,403,780 388,104 $1,250,340 192,675 487,289 268,203 219,940 Average inventory