Question

SQC Inc. had sales of $3,000,000, cost of merchandise sold of $2,100,000, and average inventory of $140,000. What is SQC Inc.'s days' sales in inventory? (Round the answer to the nearest whole number.)

Answer 1

Answer:

Days' sales in inventory = 24 days.

Explanation:

We know,

Days' sales in inventory = 365 ÷ Inventory Turnover

Given,

Inventory Turnover = Cost of goods sold (cost of merchandise sold) ÷ Average inventory

Inventory Turnover = $2,100,000 ÷ $140,000

Inventory Turnover = 15 times

Therefore,

Days' sales in inventory = 365 ÷ 15 times

Hence, Days' sales in inventory = 24.33 days

Days' sales in inventory = 24 days.

Days' sales in inventory indicates that within 24 days, the company can sell the inventory.