Question

​Carey's Department Store had net sales of​ $20 million and cost of goods sold of $17.00 million for the year. The beginning inventory for the year was $4.00 million. The ending inventory for the year was $6.00 million. What was the​ days' inventory​ outstanding?

Answer 1

Answer:

The​ days' inventory​ outstanding was 107.35 days

Explanation:

The​ days' inventory​ outstanding indicates how many days on average a company turns its inventory into sales. Days' inventory outstanding is calculated by using the following formula:

Days' inventory outstanding = (Average inventory / Cost of goods sold) x 365 days

In there,

Average inventory = (Beginning Inventory for the year + Ending Inventory for the year) /2

In ​Carey's Department Store,

Average inventory = ($4,000,000 + $6,000,000)/2 = $5,000,000

Days' inventory outstanding = ($5,000,000/$17,000,000)x365 = 107.35 days