Question

Sugar, Inc. sells $469,300 of goods during the year that have a cost of $398,600. Inventory...

Sugar, Inc. sells $469,300 of goods during the year that have a cost of $398,600. Inventory was $29,783 at the beginning of the year and $34,038 at the end of the year.

How long on average does it take to sell something from inventory after it is purchased?

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Answer #1

It takes 29 days to sell something from inventory after it is purchased.

Working

Inventory Turnover ratio
Cost of goods sold / Average Inventory = Inventory Turnover ratio
$   398,600.00 / $ 31,910.50 =                 12.49 Times

.

Average days to sell inventory
Days in a year / Inventory Turnover ratio = Average days to sell inventory
365 /              12.49 = 29 Days

.

Average Inventory calculation
Beginning balance $     29,783.00
Ending balance $     34,038.00
Total $     63,821.00
Average Inventory $     31,910.50
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