Accounting Question Current Year Inventory Turnover Ratios - 550 Words

Accounting Question: Current Year Inventory Turnover Ratios (Coursework Sample) Content: NameCourse InstructorSubjectDateCurrent year inventory turnover ratiosBIBLIOGRAPHY \l 1033 Louwers, et al. Auditing Assurance Services, 6e. New York: McGraw-Hill Education, 2013. Print. (P. 713, D-47)Inventory turnover ($000) = Cost of goods sold/ Average inventory Beginning Inventory Ending Inventory Average Inventory Cost of Goods Sold Inventory Turnover Total inventory 3000 2917 2958.5 7400 7400/298.5 = 2.5 Materials and parts 1365 620 992.5 3970 3970/992.5 = 4 Work-in-progress 623 697 660 7988 7988/660 = 12.1 Computer games 380 500 440 2200 2200/440 = 5 Flash drives 64 300 182 2000 2000/182 = 11 Semiconductor parts 80 400 240 2400 2400/240 = 10 Keyboards 488 400 444 800 800/444 = 1.8 In general, there is a positive trend in total inventory turnover with a high of 2.5 from 2.1. Trend variability exists in the finished products section with a steady rise in semiconductor parts but a declining trend in keyboards. The current year firms sales amount to $10 million w ith an overall increment of 12% in sales volume. However, slight to no change condition characterizes the product lines of the firm.Memo: Internal Audit of InventoryTo: The Vice President, ProductionFrom: Internal Audit OfficerDate: February 10, 2017Subject: Preliminary report of inventory turnover analysisThis report shows the computed turnover ratios and the prevalent investment conditions in the inventory and overall performance of our company. The report also indicates possible causes to inventory problems and solutions which are open to your views for further investigations.Inventory Turnover20112012201320142015Finished products:Computer games6.07.010.024.05.0Flash drives 8.07.27.78.511.0Semiconductor parts4.03.54.57.010.0Keyboards 3.02.52.01.91.8Work-in-process12.012.511.511.712.1Materials and parts4.04.14.34.54.0Total inventory2.12.02.12.12.5Flash drives and semiconductor parts: Both show an inventory increment at the end ($64,000-300,000 and 80, 000-400,000). Increase in inventory has enhanced the rise in sales demand. However, large inventory turnover at the end of the year would negatively affect the following years inventory. The computer games decline from 24.0 to 5.0 reflects the scenario of poor production monitoring and inventory holding in line with sales forecasts.Computer...