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Chapter 9: Question E9-23 (page 481)

The financial statements of ConAgra Foods, Inc.鈥檚 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 786Instructions Compute ConAgra鈥檚 (a) inventory turnover and (b) the average days to sell inventory for 2014 and 2013.

Short Answer

Expert verified
  1. Inventory turnover for 2013 and 2014 equals 5.37 times and 6.54 times.
  2. Average days to sell inventory for 2013 and 2014 equals 67.97 days and 55.81 days

Step by step solution

01

Calculation of inventory turnover for 2013

Inventory turnover for 2013 is calculated as follows:

InventoryTurnoverfor2013=CostofGoodsSoldBeginningInventory+EndingInventory2=$11,864$2,341+$2,0772=5路37

02

Calculation of average days to sell inventory for 2013

Average days to sell inventory is calculated as follows:

AverageDaystoSellInventory=365InventoryTurnoverfor2013=3655.37=67路97Days

03

Calculation of inventory turnover for 2014

Inventory turnover for 2014 is calculated as follows:

InventoryTurnoverfor2014=CostofgoodssoldBeginningInventory+EndingInventory2=$13,980$2,077+$2,2012=6路54

04

Calculation of average days to sell inventory for 2014

Average days to sell inventory is calculated as follows:

AverageDaystoSellInventory=365InventoryTurnoverfor2014=3656路54=55路81Days

Thus inventory turnover for 2013 and 2014 is 5.37 and 6.54, and the average days to sell inventory for 2013 and 2014 are 67.97 days and 55.81 days.

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