1Hootman Shipping has sales of 950000 and cost of goods sold

1)Hootman Shipping has sales of $950,000 and cost of goods sold of $574,200. At the beginning of the year, the inventory was $65,200. At the end of the year, the inventory balance was $74,000. What is the inventory turnover rate? (Assume a 365-day year)

2) Hudson Enterprises has sales of $1,040,000, average accounts receivable of $41,400 and average accounts payable of $45,600. The cost of goods sold is equivalent to 63% of sales. How long does it take Hudson to pay its suppliers? (Assume a 365-day year)

Solution

1)

Inventory turnover rate:

= Cost of goods sold/Average inventory

= $574,200/(($65,200+$74,000)/2)

= $574,200/$69,600

= 8.25 times per year