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VIPSolutions · Accepted Answer

# Objective
To **calculate the inventory turnover** for Dana Dairy Products in 2019 using the financial data.

---

## Available Data

From the **Income Statement** and **Balance Sheet**:
- Cost of Goods Sold (COGS) for 2019: **$87,000**
- Inventories at year-end 2019: **$4,350**

---

## Formula

$$
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold (COGS)}}{\text{Average Inventory}}
$$

Since only **end-of-year inventory** is given, we assume it represents the average (common in exam settings unless otherwise stated).

---

## Step-by-Step Calculation

1. **Identify COGS and Inventory:**
   - COGS = $87,000
   - Inventory = $4,350

2. **Apply the formula:**

$$
\text{Inventory Turnover} = \frac{87,000}{4,350}
$$

3. **Calculate:**

$$
\text{Inventory Turnover} = \frac{87,000}{4,350} = 20
$$

---

## Final Answer

**The inventory turnover for Dana Dairy Products in 2019 was**  
$$
\boxed{20}
$$

**This means the company turned over its inventory 20 times during the year 2019.**

VIPSolutions · Answer

The inventory turnover ratio measures how efficiently a company manages its inventory by analyzing how often it sells and replaces its stock over a given period. In the case of Dana Dairy Products for the year 2019, we utilized the cost of goods sold (COGS) and the year-end inventory to calculate this ratio. By applying the formula, we divided the COGS by the average inventory. The resulting figure indicates the frequency of inventory turnover, reflecting operational efficiency. In this instance, the inventory turnover was 20, signifying a robust inventory management process.

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