Question

A firm has sales of $820,000. The cost of goods sold is equal to 57 percent...

A firm has sales of $820,000. The cost of goods sold is equal to 57 percent of sales. The firm has an average inventory of $23,940. How many days on average does it take the firm to sell its inventory?

14.30 days 15.26 days 16.79 days 17.44 days 18.70 days

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Answer #1
Calculation of days on average does it take to sell inventory:
Cost of goods sold= Sales*0.57= 820000*0.57= $467400
Inventory turnover ratio= Cost of goods sold/ average inventory
                                                = 467400/23940= 19.52
Number of days on average does it take to sell inventory= 365/19.52= 18.70
Therefore correct answer is 18.70 days
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