Answer:
Inventory turnover ratio= 2.185 times
Day's sales in inventory = 167.05 days
Explanation:
Carla Vista incorporation has a sales of $2,300,000
The gross profit margin is 24%
The inventory is $800,000
The First step is to calculate the cost of goods sold
= Sales-gross profit margin×sales
= 2,300,000-(0.24×2,300,000)
=2,300,000-552,000
=$1,748,000
Therefore the inventory turnover ratio can be calculated as follows
Inventory turnover ratio= 1,748,000/800,000
= 2.185 times
Day's sales in inventory can be calculated as follows
= 365/ inventory turnover ratio
= 365/2.185
= 167.05 days
