Question

SuperAmazona has ending inventory of $200,000, and cost of goods sold for the year just ended was $1,410,000. On average, how long does a unit of inventory sit on the shelf before it is sold?

Answer 1

Answer:

On average, there are 51.77 days, a unit of inventory sit on the shelf before it is sold.

Explanation:

Super Amazona has ending inventory of $200,000, and cost of goods sold for the year just ended was $1,410,000.

Inventory turnover ratio = Cost of Goods Sold/Inventory = $1,410,000/$200,000 = 7.05 times

The number of days a unit of inventory sit on the shelf before it is sold = 365/Inventory turnover ratio = 365/7.05 = 51.77 days