The following information was taken from the accounting records of three competitors for the 2016 fiscal year.

Required:
a. Explain how to calculate inventory turnover and the number of day€™s sales in inventory.
b. What do the two ratios tell us about inventory?
c. Compare the ratios for the three companies and comment on the results. What might contribute to the lower turnover and higher number of days sales in inventory at Company A?

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Company A Company B Company C Inventory Turnover Ratio 11.4 14.8 14.9 Days in Inventory 32.0 24.7 24.5