HomeworkLib
Question

Mattress Wholesalers, Inc., is constantly trying to reduce its inventory in the supply chain. Last year,...

  1. Mattress Wholesalers, Inc., is constantly trying to reduce its inventory in the supply chain. Last year, the cost of goods sold was $7.5 million and inventory was $1.5 million. This year, the cost of goods sold is $8.6 million and inventory investment is $1.6 million.
  1. What is Mattress Wholesalers inventory turnover this year vs last year?
  1. Is Mattress Wholesalers making progress in its inventory-reduction effort? Comment.
business   Operations-Management   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution:

(a) Inventory turnover:

Inventory turnover = Cost of goods sold / Inventory

Inventory turnover (This year) = $8.6 million / $1.6 million = 5.38 times per year

Inventory turnover (Last year) = $7.5 million / $1.5 million = 5.00 times per year

(b) Answer: Yes

Explanation: Since, Mattress wholesalers’ inventory turnover of 5.38 times this year is higher than its inventory turnover of 5.00 times last year, it shows that Mattress wholesalers has made progress in its inventory reduction efforts. A higher inventory turnover shows faster movement of inventory and increased demand of Mattress wholesalers’ products.

0 0
Add a comment
Know the answer?
Add Answer to:
Mattress Wholesalers, Inc., is constantly trying to reduce its inventory in the supply chain. Last year,...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Please answer all parts of question number 3 and type them and bold or underline the...

    Please answer all parts of question number 3 and type them and bold or underline the correct answers Baker Mfg Inc. wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 1313 times per year and 88 % of their assets invested in inventory.    Baker Mfg. Inc. Net Revenue $27 comma 50027,500 Cost of sales $19 comma 41019,410 Inventory $1 comma 2901,290 Total assets $17 comma 82017,820 a) What is Baker's inventory turnover?...

  • 21) Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end,...

    21) Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on average inventories from last year's financial statement: $2,500,000 $3,000,000 $ 2,800,000 Raw materials Work-in-process Finished goods In addition, the cost of goods sold last year (50 weeks) was $15 million. What was the inventory turnover? A) less than or equal to two B) greater than two...

  • Inventory Management Williams & Sons last year reported sales of $44 million, cost of goods sold...

    Inventory Management Williams & Sons last year reported sales of $44 million, cost of goods sold (COGS) of $36 and an inventory turnover ratio of 4. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round your answer...

  • Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales...

    Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2019 sales (all on credit) were $197,000, its cost of goods sold is 80% of sales, and it earned a net profit of 4%, or $7,880. It turned over its inventory 7 times during the year, and its DSO was 33 days. The firm had fixed assets totaling $31,000. Chastain's payables deferral period is 50 days....

  • Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales...

    Chastain Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash conversion cycle. Chastain's 2019 sales (all on credit) were $226,000, its cost of goods sold is 80% of sales, and it earned a net profit of 3%, or $6,780. It turned over its inventory 6 times during the year, and its DSO was 33 days. The firm had fixed assets totaling $30,000. Chastain's payables deferral period is 40 days....

  • Problem 16-01 Inventory Management Williams & Sons last year reported sales of $23 million, cost of...

    Problem 16-01 Inventory Management Williams & Sons last year reported sales of $23 million, cost of goods sold (COGS) of $18 and an inventory turnover ratio of 2. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round...

  • Problem 16-01 Inventory Management Williams & Sons last year reported sales of $128 million, cost of...

    Problem 16-01 Inventory Management Williams & Sons last year reported sales of $128 million, cost of goods sold (COGS) of $105 and an inventory turnover ratio of 5. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 7 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round...

  • Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales...

    Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2015 sales (all on credit) were $123,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.22 times during the year. Its receivables balance at the end of the year was $13,125.85 and its payables balance at the end of the year was $7,395.59. Using this information calculate the firm's cash...

  • Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales...

    Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2015 sales (all on credit) were $156,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.96 times during the year. Its receivables balance at the end of the year was $13,183.94 and its payables balance at the end of the year was $7,401.53. Using this information calculate the firm's cash...

  • Problem 16-01 Inventory Management Williams & Sons last year reported sales of $46 million, cost of...

    Problem 16-01 Inventory Management Williams & Sons last year reported sales of $46 million, cost of goods sold (COGS) of $36 and an inventory turnover ratio of 4. The company is now adopting a new inventory system. If the new system is able to reduce the firm's inventory level and increase the firm's inventory turnover ratio to 6 while maintaining the same level of sales and COGS, how much cash will be freed up? Do not round intermediate calculations. Round...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT