How many days on average does it take a firm to sell an inventory item if the av

Question

How many days on average does it take a firm to sell an inventory item if the average inventory is $42,800, the cost of goods sold is 78% of sales, and the yearly sales are $311,400? The profit margin is 6% and the tax rate is 35%. Harry Joiner, Inc. currently has an inventory turnover of 15.7, a payables turnover of 9.6, and a receivables turnover of 8.1. How many days are in the cash cycle? What is a firm's average balance in accounts payable if the firm has a cash cycle of 13.5 days, an operating cycle of 21 days, and an inventory period of 2 days. The firm reported cost of goods sold in the amount of $280,000 and credit sales were $430,000.

Explanation / Answer

Days Sales of Inventory (Average Inventory ÷ Cost of Goods Sold) x 365 (42800/242892)*365 64.31665102 Cash Cycle Operating Cycle = Days' Sales of Inventory + Days Sales Outstanding-Days purchase outstanding (365/15.7)+(365/8.1)-(365/9.6) 30.28930271

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