Ermy Corporation has ending inventory of $692,673 and cost of goods sold for the year just ended was $5,433,181.

Ermy Corporation has ending inventory of $692,673 and cost of goods sold for the year just ended was $5,433,181.  

Requirement 1:

What is the inventory turnover? (Round your answer to 2 decimal places (e.g., 32.16).)

 

Inventory turnover

times

 

Requirement 2:

The days’ sales in inventory? (Round your answer to 2 decimal places (e.g., 32.16).)

 

Days’ sales in inventory

days

 

Requirement 3:

How long on average did a unit of inventory sit on the shelf before it was sold? (Round your answer to 2 decimal places (e.g., 32.16).)

 

Unit of inventory

days

Explanation:

1.

The inventory turnover for the company was:

 

Inventory turnover	=	COGS / Inventory
Inventory turnover	=	$5,433,181 / $692,673
Inventory turnover	=	7.84 times

2.

Using the inventory turnover, we can calculate the days’ sales in inventory as:

 

Days’ sales in inventory	=	365 days / Inventory turnover
Days’ sales in inventory	=	365 days / 7.84
Days’ sales in inventory	=	46.53 days

3:

On average, a unit of inventory sat on the shelf 46.53 days before it was sold.