The Following Data Are Taken from the Financial Statements (A)Determine for Each Year (1) the Invent Ory Tumover and

question 40

Essay

The following data are taken from the financial statements:
$\begin{array}{lll}\text { Preceding } & \text { Current } \\\text { Year } & \text { Year }\\\$ 4,056,000 & \$ 3,592,000 & \text { Net sales } \\2,656,000 & 2,092,000 & \text { Cost of goods sold } \\328,000 & 332,000 & \text { Average monthly inventory } \\347,000 & 372,000 & \text { Inventor, end of year }\end{array}$
(a)Determine for each year (1) the invent ory tumover and (2) the number of days s ales in inventary.
(b)Comment on the favorable and unfavor able trends revealed by the data.

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Definitions:

Entity Method

An approach in accounting where the financial performance and position of a business entity are considered separately from its owners.

Unrealized Profits

Profits that have been generated on paper from an investment but have not yet been realized through the sale of that investment.

Upstream Sales

Transactions where a subsidiary sells goods or services to the parent company or another subsidiary within the same corporate group, often scrutinized for transfer pricing.

Subsidiary's Separate-entity Earnings

The net income or loss generated by a subsidiary, considered independently before any adjustments for intercompany transactions or consolidation.