Question

The financial statements of ConAgra Foods, Inc.’s 2014 annual report disclose the following information.

(in millions)
2014

2013

2012

Year-end inventories $2,201 $2,077 $2,341
Fiscal Year

2014

2013

Net sales $17,703 $15,427
Cost of goods sold 13,980 11,864
Net income 315 786

Compute ConAgra’s (a) inventory turnover and (b) the average days to sell inventory for 2014 and 2013. (Round inventory turnover to 1 decimal place, e.g. 7.6 and average days to sell inventory to 0 decimal places, e.g. 65.)

2014

2013

(a) Inventory turnover


times


times
(b) Average days to sell inventory


days


days

Answer 1

Answer:

The inventory turnover for 2014 is 6.54 times while that of year 2013 is 5.37 times

On other hand,average days was 56 days in the year 2014 and 64

days in 2013.This means that in 2014,it took 56 days to replenish stock and 64 days in prior year

Explanation:

The formula for inventory turnover is costs of goods sold/average inventory,where average inventory is: opening plus closing inventory/2

                                                        2014                              2013

Cost of goods sold                        $13980                          $11,864

Average inventory

2014:($2201+$2077)/2                   $2139

2013:($2077+$2341)/2                                                           $2209

                                                $13980/$2139                $11864/$2209

Inventory turnover                     6.54 times                      5.37 times  

Average days is given=365 days/inventory turnover

Average days                            365/6.54                          365/5.7

Average days                               55.81                              64.04