Asked by Daynellie Kendall on Jul 20, 2024
Verified
The following data were taken from the annual reports of Big Bang Inc., a manufacturer of fireworks, and Orange Inc., a manufacturer of computers. 
(a) Determine the (1) inventory turnover and (2) number of days' sales in inventory for Big Bang and Orange.Round your answers to two decimal places.(b) How would you expect these measures to compare between the companies? Why?
Inventory Turnover
A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency in managing stock levels.
Days' Sales
A metric that estimates the average length of time it takes for a company to convert its accounts receivable into cash.
Annual Reports
Comprehensive reports on a company's activities throughout the preceding year, intended to give shareholders and other interested parties information about the company's performance and financial standing.
- Understand and calculate various inventory accounting methods (FIFO, LIFO, and Average cost).
- Interpret and calculate inventory turnover and days' sales in inventory.
Verified Answer
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Learning Objectives
- Understand and calculate various inventory accounting methods (FIFO, LIFO, and Average cost).
- Interpret and calculate inventory turnover and days' sales in inventory.