Question

The King Corporation has ending inventory of $481,060, and cost of goods sold for the year just ended was $4,016,851. a. What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) b. What is the days' sales in inventory? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) c. How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

Inventory TurnOver 8.35

Days outstanding 43.71

Average days outstanding 21.86

Explanation:

$\frac{COGS}{Inventory} = Inventory Turnover$

$\frac{4016851}{481060} = Inventory Turnover$

Inventory TO 8.35

This means the inventory is being sold 8.35 times during the year

$\frac{365}{Inventory TO} = Days on Inventory$

$\frac{365}{8.35} = Days on Inventory$

Days on Inventory 43.71

The entire inventory is being replaced every 43.71 days

If we assume the batch is sold uniformly over those days

then the haverage wil lbe half of the days outstading:

43.71 / 2 = 21,855‬ = 21.86