Question

A company reports the following: Cost of goods sold $5,058,900 Average inventory 328,500 Round your answers to one decimal place. a. Determine the inventory turnover. Assume a 365-day year. fill in the blank 1 15.4 b. Determine the number of days' sales in inventory. Assume a 365-day year.

Answer 1

Answer and Explanation:

The computation is shown below:

a. Inventory turnover

= Cost of goods sold ÷ average inventory

= $5,058,900 ÷ 328,500

= 15.4 times

b. The number of days' sales in inventory is

= Total number of days in a year ÷ inventory turnover ratio

= 365 ÷ 15.4

= 23.70 days

We simply applied the above formula so that the correct value could come

And, the same is to be considered