Beckenworth had cost of goods sold of $10,821 million, ending inventory of $3,489 million, and average inventory of $2,105 million. Its days' sales in inventory equals: (Use 365 days a year.)Multiple Choice46.4.117.7 days.46.7.0.3.71.0 days.
Question
Beckenworth had cost of goods sold of 3,489 million, and average inventory of $2,105 million. Its days' sales in inventory equals: (Use 365 days a year.)Multiple Choice46.4.117.7 days.46.7.0.3.71.0 days.
Solution
To calculate the days' sales in inventory, you need to use the following formula:
Days' Sales in Inventory = (Inventory / Cost of Goods Sold) x 365
Given the values:
Inventory = Average Inventory = 10,821 million
Substitute the given values into the formula:
Days' Sales in Inventory = (2,105 / 10,821) x 365 = 71.0 days
So, the correct answer is 71.0 days.
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