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Understanding Real World Financial ReportsNameACC281: Accounting Concepts for Health Care ProfessionalsUnderstanding Real World Financial ReportsUse the Topps Companys annual report in Appendix B to answer the following questions.A. What was Topps inventory turnover ratio and average days to sell inventory for 2006 and2005?B. Is the companys management of inventory getting better or worse?C. What cost flow method(s) did Topps use to account for inventory?According to Appendix B, the cost of sales for Topps was $198,054 in 2006 and $189,200 in 2005. The total inventory was $36,781 in 2006 and $32,936 in 2005. To find out what the inventory turnover ratio is you need to divide the cost of sales by inventory. In the year 2006 this would be $198,054/$36,781which would be 5.38. In the year 2005 this would be $189,200/$32,936 which would be 5.74. The inventory turnover ratio for 2006 is estimated to be 5.38. The inventory turnover ratio for 2005 is estimated to be 5.74. To figure out how many days the company had to sell inventory you must divide the turnover ratio by the number of days that are in a year which is 365 days. For the year of 2006

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