Question

Inventory Analysis A company reports the following: Cost of goods sold $347,480 Average inventory 86,870 Determine (a) the inventory turnover and (b) the number of days' sales in inventory. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume 365 days a year.

Answer 1

Answer:

a. 4

b. 91.25 Days

Explanation:

a. Inventory Turnover = Cost of goods sold/ Average Inventory

= $347,480 / 86,870

= 4

b. Number of days sales in Inventory = Inventory/ COGS*365

= 86,870 / $347,480 * 365

= 91.25 Days