The following information is available for the Starr Corporation: Sales$750,000Cost of goods sold450,000Gross profit300,000Operating income85,000Net income42,000Inventory, beginning-year71,200Inventory, end-of-year48,800Calculate the company's inventory turnover and its days' sales in inventory.
What will be an ideal response?
Inventory turnover = $450,000/(($71,200 + $48,800)/2) = 7.5 times
Days' sales in inventory = ($48,800/$450,000) * 365 = 39.6 days
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