The Rigby Supplement Company showed the following data in its financial statements.
|
|
2008
|
2007
|
|
Cost of goods sold
|
$1,400,000
|
$1,125,000
|
|
Beginning inventory
|
275,000
|
175,000
|
|
Ending inventory
|
405,000
|
275,000
|
1. Compute the number of days' sales in average inventory for both 2007 and 2008. What can you infer from these numbers?
2. How would you interpret the answer to (1) if this company were in the business of selling fresh fruits and vegetables? What if the company sold real estate?