Question

SRC, Inc., sells its inventory in an average of 43 days and collects its receivables in 3.6 days, on average. What is the inventory turnover rate? Assume a 365-day year.

Answer 1

Options:

a. 8.49

b. 7.29

c. 8.68

d. 10.18

e. 7.13

Answer: A. 8.49

Explanation:

Inventory turn over rate is a term used in supply chain management to describe the rate at which inventories are used up or replaced. Inventory turnover rate is essential for effective inventory management to ensure that Manufacturing is not stopped due to non availability of inventory.

Inventory turnover ratio=number of days in the year÷number of days in which inventories are sold

=365days/43days

=8.49.

Answer 2

Answer:

8.49 times

Explanation:

Inventory turnover is a term in accounting that describes the number of times inventory of a company is sold  or used in a certain period, usually measured in a year.

It is measured by dividing the number of days in a year by the average days in which the inventory are sold.

Hence in this case inventory turnover is 365 days / 43 days = 8.49times

Therefore, the inventory turnover is 8.49times