Cost of goods sold $435,000
Average inventory 72,500
Determine (a) the inventory turnover and (b) the number of days’ sales in inventory.
Round to one decimal place.
Answer:
a. Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
Inventory Turnover = $435,000 ÷ $72,500
Inventory Turnover = 6.0
Average Inventory
Average Daily Cost of Goods Sold
$72,500 ÷ ($435,000 ÷ 365)
$72,500 ÷ $1,192
60.8 days