The Rigby Supplement Company showed the following data in its financial statements. ______________________________________________________2013..............2012 Cost of goods sold

Question:

The Rigby Supplement Company showed the following data in its financial statements.

______________________________________________________2013..............2012

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,400,000.......$1,125,000

Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,000 ..........175,000

Ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .405,000...........275,000

1. Compute the number of days' sales in average inventory for both 2012 and 2013. What can you infer from these numbers?

2. How would you interpret the answer to (1) if this company were in the business of selling fresh fruits and vegetables? What if the company sold real estate?

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...