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Exercise

Days in inventory and asset turnover ratio

In this exercise, we will calculate the time it takes for a company to turn inventory into sales (days in inventory or DII ratio) and a ratio to calculate the efficiency of a company’s assets by seeing how the company uses its assets to generate sales (asset turnover ratio). The required formulas are:

\(DII = \frac{Average\,Inventory}{Total\,Cost\,of\,Goods\,Sold} \times Days\,in\,Financial\,Year\)

\(Total\,Average\,Assets = {(Opening\,Balance\,+\,Closing\,Balance)/2}\)

\(Asset\,Turnover = \frac{Sales}{Total\,Average\,Assets}\)

The following are preloaded:

Metric Variable Value
Total COGS cogs_tot 4000
Average Inventory av_inv 1900
Total Sales sales_tot 10000
Opening balance Assets ob_assets 2000
Closing balance Assets cb_assets 7000
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  • Calculate the DII ratio dii_ratio for T-Z and print the result.
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