ACC220
Wk 4 Problem
ACC220 – Week 4
A. The Inventory Turnover is made from the Cost of Merchandise Sold over the Average
Inventory. So, the Average Inventory = in the inventory, end of the year + inventory,
beginning of the year. So, the Target Average Inventory=8,601+8,282 /2 or 8,441.5
So, target – Inventory turnover= $51,997/8,441.5 or 6.16
Amazon Average Inventory= (10,243+8,299)/2 or 9,271
Amazon – Inventory turnover = 71,651/9,271 or 7.73
B. The Day Sales in the inventory would equal from Average Inventory/ Average Daily Cost
of Merchandise Sold. So, the target inventory = 8,441.5 The Target Average Daily of
merchandise would = cost of merchandise sold / 365 days or 51,997/365=142.5
Target days sales in inventory= 8,441.5/142.5 or 59 Days.
Amazon Average inventory = 9,271 with amazon average daily cost of merch =
cost of merch sold / 365 days or 71,651/365=196.3
Amazon Days Sale in inventory=9,271/196.3 or 47days.
