The Green Corporation has ending inventory of $481,060, and cost of goods sold f

Question

The Green Corporation has ending inventory of $481,060, and cost of goods sold for the year just ended was $4,016,851. What is the inventory turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) 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.)

Explanation / Answer

Inventory turnover

The Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year.Formula is as below

Inventory turnover =cost of goods sold / Ending inventory

=$ 4,016,851/$ 481,060

Inventory turnover =8.35 times

Day's slaes in inventory

Days' sales in inventory is the number of days in a year divided by the inventory turnover ratio

Day's slaes in inventory = 360/8.35

=43 days (approx)

Note: No of days in year taken as 360.

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