Question

Refer to the following selected financial information from Texas Electronics. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.) Year 2 Year 1 Cash $ 37,500 $ 36,850 Short-term investments 90,000 90,000 Accounts receivable, net 85,500 86,250 Merchandise inventory 121,000 117,000 Prepaid expenses 12,100 13,500 Plant assets 388,000 392,000 Accounts payable 113,400 111,750 Net sales 711,000 706,000 Cost of goods sold 390,000 385,500

Answer 1

Answer:

$113.24

Explanation:

Computation for the company's days' sales in inventory for Year 2.

Using this formula

Days' sales in inventory = Merchandise Inventory / Cost of Goods Sold * 365

Let plug in the formula

Days' sales in inventory = $121,000 / $390,000 * $365

Days' sales in inventory= $113.24

Therefore the company's days' sales in inventory for Year 2 will be $113.24