In 2015, Hidey Company had average inventory of $86,000. The 2015 income statement showed net sales of $2,200,000 and gross profit of $420,000. In 2014, it was taking the company approximately 30 days to sell its inventory.
-In 2015, the company's days sales in inventory
A) improved.
B) deteriorated.
C) remained unchanged.
D) More information is needed to make this determination.

Question

Quizplus · Accepted Answer

The company's days sales in inventory improved in 2015 because it was taking the company less time to sell its inventory. In 2014, it was taking the company approximately 30 days to sell its inventory. In 2015, the company's days sales in inventory decreased to 20 days. This means that the company was able to sell its inventory more quickly in 2015 than it was in 2014.

In 2015, Hidey Company Had Average Inventory of $86,000