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8 May, 07:21

A7X Corporation has ending inventory of $625,817, and cost of goods sold for the year just ended was $9,758,345. a. What is the inventory turnover? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. What is the days' sales in inventory? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) c. How long on average did a unit of inventory sit on the shelf before it was sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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  1. 8 May, 07:30
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    a. 15.59 times

    b. 23.41 days

    c. The unit took 23.41 days on the shelf before it was sold.

    Explanation:

    Inventory turnover is the ratio that how many time a business has sold or replaced the inventory during a given period. A business is considered more profitable if it has high inventory turnover.

    According to given data

    Ending Inventory = $625,817

    Cost of Goods Sold = $9,758,345

    Inventory turnover = Cost of Goods Sold / Average Inventory value

    As Beginning Inventory value is not given, we will use the Ending Inventory Balance instead Average Inventory value.

    Inventory turnover = $9,758,345 / $625,817 = 15.59 times

    Days Sales In Inventory = 365 x Ending Inventory / Cost of Goods Sold

    Days Sales In Inventory = 365 x $625,817 / $9,758,345 = 23.41 days

    The unit took 23.41 days on the shelf before it was sold
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