Answe2.55 times
Explanation:
Current assets represent the resources of short-term nature which a business expects to convert back to cash between a year. They include inventory, receivables.
Inventory turnover is the average number of days it takes a Nikola Motors to sell its its stock and replenish it. This can be determined by either working it out in number of times the stock is sold and replenished or the length of days its takes to do same.
The formula for both are given below:
Inventory turnover( no of times) = Cost of goods sold / average inventory
<em> = x number of times</em>
Inventory days = (Average inventory/ Cost of goods sold) *365 days
<em> = number of days</em>
<em>Note: The inventory figure was not given in the question, but we can work it out;</em>
Current assets= cash + inventory + receivables
85,000 = 38,250 + 21,250 + y <em>Lets "y "demote inventory</em>
y = 85,000 - 38250 - 21, 250
y= 25,500
<em />
<em>Also we need to work out cost of sold;</em>
Cost of goods sold = 65% × 100,000
= 65,000
<em>Now we can work out the inventory turnover;</em>
Inventory turnover = 65,000/25,500
<em> </em> = 2.55 times
Nikola Motors is seling and replacing its inventory 2.55 times
