Principles of Financial Accounting · free preview
Measuring Inventory Management with Turnover and Days' Sales in Inventory
Inventory turnover and days' sales in inventory convert balances into speed measures that reveal whether stock is moving efficiently or capital is stagnating on the shelf.
1. Speed as the inventory metric
Speed as the inventory metric
2. A worked example
A worked example
3. Interpreting movement
Interpreting movement
4. Connecting to the operating cycle
Connecting to the operating cycle
5. Turnover inputs
Which figures compute inventory turnover?
6. Computing turnover
Cost of goods sold is 540,000 dollars and average inventory is 90,000 dollars. Compute inventory turnover.
7. Computing DSI
Inventory turnover is 6. Compute days' sales in inventory, rounded to the nearest whole day.
8. Falling turnover warning
A retailer's inventory turnover fell from 9 to 5 over two years. What is the most likely story?
9. Average inventory
Beginning inventory is 80,000 dollars and ending inventory is 100,000 dollars. Compute average inventory in dollars, number only.
10. Days supply at turnover of 8
A grocer achieves turnover of 8. Compute days' sales in inventory, rounded to the nearest whole day.
Practice this interactively
Free account · instant grading · spaced review that schedules itself.
Start this course for free