Analysis and communication of accounting information — practice question

H Limited’s cost of sales over the latest two years (Year 2 and Year 1) is shown below: average inventory: Year 2 = 100 000, Year 1 = 65 000 credit purchases: Year 2 = 910 000, Year 1 = 760 000 cost of sales: Year 2 = 850 000, Year 1 = 750 000 Which statement about the efficiency of inventory turnover is the correct one?

• AYear 2 is better because the average inventory is higher.
• BYear 2 is better because the inventory turnover (in days) is higher.
• CYear 2 is worse because the cost of sales is higher.
• DYear 2 is worse because the inventory turnover (in days) is higher.