Question

sesame international held an average inventory of 1120000 (raw materials, work-in-process, finished goods) last year. its sales were 7000000, and its cost of goods sold was 3750000. the firm operates 300 days a year. what is the number of days of inventory sesame is holding? 90 (round to a whole number.)

Answer 1

The number of days of inventory that Sesame International is holding is calculated by dividing the average inventory by the cost of goods sold and then multiplying by 300 days. The calculation results in approximately 89.55 days, which is rounded to 90 days.

Step-by-step explanation:

The calculation needed to determine the number of days of inventory that Sesame International is holding is accomplished by dividing the average inventory by the cost of goods sold (COGS) and then multiplying by the number of operation days within a year.

To calculate the inventory days, we use the formula:

1. Calculate the Inventory turnover ratio: COGS / Average Inventory.
2. Determine the number of days of inventory: 300 (operational days per year) / Inventory Turnover Ratio.

Using the provided figures:

• Inventory Turnover Ratio = 3,750,000 / 1,120,000 ~ 3.35
• Days of Inventory = 300 / 3.35 ~ 89.55 days

After rounding to the nearest whole number, the number of days of inventory Sesame International is holding is approximately 90 days.