The Green Corporation has ending inventory of $485,065, and cost of goods sold f

Question

The Green Corporation has ending inventory of $485,065, and cost of goods sold for the year just ended was $4,462,598.

What is the days' sales in inventory? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

How long on average did a unit of inventory sit on the shelf before it was sold? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

The Green Corporation has ending inventory of $485,065, and cost of goods sold for the year just ended was $4,462,598.

Explanation / Answer

1. Calculation of Inventory Turnover Ratio:

Inventory Turnover = Cost of Goods Sold / Closing Inventory

Cost of Goods Sold = $4,462,598, Closing Inventory = $485,065

Inventory Turnover = 4,462,598 / 485,065 = 9.20 Times

2. Days Sales in Inventory = 365 / Inventory Turnover Ratio

Days Sales in Inventory = 365 / 9.20 = 39.67 Days

3. Days on shelf in Inventory = 365 / Inventory Turnover Ratio

Days on shelf in Inventory = 365 / 9.20 = 39.67 Days

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