Answered

A firm reported year-end cost of goods sold of $10 million. It listed $2 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm's inventory stay on the premises?

Answer :

TomShelby

Answer:

Days on Inventory: 73

Explanation:

First step, calculate the Inventory Turnover

[tex]\frac{Sales}{Average Inventory} = $Inventory Turnover[/tex]

​Where:

In this case we are given with only one inventory so we work with that.

Sales       10

Inventory 2

[tex]\frac{10}{2} = $Inventory Turnover[/tex]

Inventory TO 5

The company sales their inventory 5 times per year

Next, we calculate the days on inventory

[tex]\frac{365}{Inventory TO} = $Days on Inventory[/tex]

Inventory TO 5

Year 365

[tex]\frac{365}{5} = $Days on Inventory[/tex]

Days on Inventory: 73

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