The Cape Corporation has ending inventory of $483,565, and cost of goods sold fo
ID: 2648148 • Letter: T
Question
The Cape Corporation has ending inventory of $483,565, and cost of goods sold for the year just ended was $4,448,798.
What is the days' sales in inventory? (Use 365 days a year. Round your answer to 2 decimal places. (e.g., 32.16))
How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year. Round your answer to 2 decimal places. (e.g., 32.16))
The Cape Corporation has ending inventory of $483,565, and cost of goods sold for the year just ended was $4,448,798.
Explanation / Answer
Inventory turnover = cost of goods sold/inventory
= 4448798/483565 = 9.20 times
Day's sales in inventory = (ending inventory/cost of goods sold)*365
= (483565/4448798)*365 = 39.67 days
Inventory days on shelf = 365/inventory turnover = 365/9.20 = 39.67 days
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