Early in 2012, Paulo Company switched to a just in time inventory system. Its sales, cost of goods sold, and inventory amounts for 2011 and 2012 are shown below.
|
2011 |
2012 |
|
|
Sales |
$3,120,000 |
$3,713,000 |
|
Cost of goods sold |
1,200,000 |
1,425,000 |
|
Beginning inventory |
180,000 |
220,000 |
|
Ending inventory |
220,000 |
80,000 |
Determine the inventory turnover and days in inventory for 2011 and 2012. Discuss the changes in the amount of inventory, the inventory turnover and days in inventory, and the amount of sales across the two years.