Below is presented a table of data for cost of goods sold and ending inventory for the first six months of 2012 for Wynn Manufacturing, Inc.
Dec. Jan Feb Mar Apr May June
Cost of goods sold - 1,000. 1,500. 2,100. 2,700. 3,500. 4,800
Ending inventory. - 300. 450. 630. 810. 1,050. 1,440
You may assume that each month has 30 days.
a. Calculate the number of days of cost of goods sold held in inventory for March, April, May, and June assuming quarterly cost of goods sold is used to calculate average daily cost of goods sold.
b. Discuss your findings in part a. What is happening with the firm’s investment in inventory?