Question

Zhang Company reported Cost of goods sold of $835,000 and ending Inventory of $41,750. The Days' sales in inventory (rounded to whole days) is:_______
a. 7 days.
b. 418 days.
c. 56 days.
d. 18 days.
e. 20 days.

Answer 1

Answer:

d. 18 days.

Explanation:

The Days' sales in inventory measures the number of days taken to sell inventory in a period.

The Days' sales in inventory formula is provided below:

Days Sales of Inventory = (Ending Inventory / Cost of Goods Sold) x 365

Ending inventory=$41,750

cost of goods sold =$835,000

Days Sales of inventory=($41,750/$835,000)*365

Days Sales of inventory=18.25 (18 when rounded to whole day)