Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $550,000, and sales of $800,000. Delmar's days in inventory is:

Question

Business

Heidy Marshall

12 December, 19:23

Delmar Company had beginning inventory of $90,000, ending inventory of $110,000, cost of goods sold of $550,000, and sales of $800,000. Delmar's days in inventory is:

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Answers (1)

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Marks · Answer 1

Days in inventory is 66 days

Explanation:

The formula for days in inventory is 365 days/inventory turnover while inventory turnover is costs of good sold divided by average inventory.

costs of goods sold is $550,000

average inventory is ($90,000+$110,000) / 2=$100,000

inventory turnover = $550,000/$100000

inventory turnover = 5.5 times

The days in inventory can then be computed thus:

days in inventory=365 days/5.5=66.36 days

The days in inventory is the average number of days that it took inventory to be sold and it is approximately 66 days in this instance