The following data were taken from the income statements of Merlot Company.
|
2012 |
2011 |
|
|
Sales revenue |
$6,420,000 |
$6,240,000 |
|
Beginning inventory |
960,000 |
840,000 |
|
Purchases |
4,840,000 |
4,661,000 |
|
Ending inventory |
1,020,000 |
960,000 |
Compute for each year (a) the inventory turnover ratio and (b) days in inventory. What conclusions concerning the management of the inventory can be drawn from these data?