Home › ACCA › Financial Accounting › Ratio Analysis › Average inventory is $51,500 and cost of merchan…
Average inventory is $51,500 and cost of merchandise sold is $414,000. Using a 365-day year, what is the number of days' sales in inventory (to one decimal)?
A8.0 days
B45.4 days
C18.9 days
D51.5 days
Answer & Solution
Correct answer: B. 45.4 days
1. Cost per day = $414,000 / 365 = $1,134.
2. Days' sales in inventory = average inventory / cost per day = $51,500 / $1,134.
3. = 45.4 days.
4. Trap: 18.9 (option C) divides by sales/365 instead of cost of merchandise sold / 365.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Number of Days' Sales in Inventory", p.299_
Related questions
A DuPont analysis breaks the return on equity into which three components?The market price per share is $70.00 and earnings per share is $28.43. What is the price-eDividends per share are $0.96 and the market price per share is $70.00. What is the divideCommon stock dividends are $8,000 and common stock of $83,000 has a $10 par value. What isNet income is $248,000 and sales are $994,000. What is the profit margin (to one decimal)?Gross profit is $580,000 and sales are $994,000. What is the gross profit percentage (to oNet income is $248,000 and preferred dividends are $12,000. Common stock of $83,000 has a Net income is $248,000 and preferred dividends are $12,000. Average common stockholders' e