What is the inventory turnover? ( Do not round intermediate calculations. R ound
ID: 2760366 • Letter: W
Question
What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
What is the days’ sales in inventory? (Do not round intermediate calculations. 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? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Bobaflex Corporation has ending inventory of $694,773 and cost of goods sold for the year just ended was $6,759,516.Explanation / Answer
Answer for requirement 1:
Closing stock= $694,773.
Cost of goods sold = $6,759,516.
Formula for inventory turnover ratio= Cost of goods sold/Average inventory.
As opening stock is not known, closing stock is only used.
=$6,759,516./$694,773
=9.73.
Answer for requirement no.2:
Formula for days sales in inventory = 365/Inventory turnover ratio
=365/9.73
=37.51 days.
Answer for requirement no.3:
It is same as above, before a unit is sold a unit of inventory would sit 37.51 days on the shelf.
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