Exercise 6-11 Suppose this information is available for PepsiCo, Inc. for 2015,
ID: 2543460 • Letter: E
Question
Exercise 6-11
Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017.
Calculate the inventory turnover for PepsiCo, Inc. for 2015, 2016, and 2017. (Round inventory turnover to 1 decimal place, e.g. 5.1.)
Calculate the gross profit rate for PepsiCo, Inc. for 2015, 2016, and 2017. (Round gross profit rate to 1 decimal place, e.g. 5.1%.)
Exercise 6-11
Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017.
Calculate the inventory turnover for PepsiCo, Inc. for 2015, 2016, and 2017. (Round inventory turnover to 1 decimal place, e.g. 5.1.)
Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. 5.1.)Explanation / Answer
Inventory Turnover = Cost of goods sold / Average inventory
2015 = $18,298 / {($1,800 + $2,400) / 2} = 8.7 times
2016 = $20,757 / {($2,400 + $2,600) / 2} = 8.3 times
2017 = $19,951 / {($2,600 + $2,700) / 2} = 7.5 times
Days in inventory = 365 / Inventory Turnover
2015 = 365 / 8.7 = 42.0 days
2016 = 365 / 8.3 = 44.0 days
2017 = 365 / 7.5 = 48.7 days
Gross profit rate = (Sales revenue - Cost of goods sold) / Sales revenue
2015 = ($39,720 - $18,298) / $39,720 = 53.9%
2016 = ($43,585 - $20,757) / $43,585 = 52.4%
2017 = ($43,528 - $19,951) / $43,528 = 54.2%