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4 July, 02:39

The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is. 71. How many days on average does it take to sell the inventory

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  1. 4 July, 05:35
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    Answer: 83.53 days.

    Explanation:

    We would need to calculate the Current Assets as well as the Quick Assets.

    Calculating the Current Assets we can use the Current ratio and Current Liabilities as follows,

    Current Assets = Current Ratio * Current Liabilities

    = 1.22 * 28,000

    = $34,160

    Then we calculate the Quick Assets which are essentially the most liquid assets being Cash and Cash Equivalents,

    = Quick Ratio * Current Liabilities

    = 0.71 * 28,000

    = $19,880

    Inventory will be Current Assets minus Quick Assets because Current Assets include all Current Assets whereas Quick Assets are Cash And Cash Equivalents Current Assets

    = 34,160 - 19,880

    = $14,280

    We can then calculate the Inventory Turnover as,

    = Cost of Goods sold / Inventory

    = 62,400/14,280

    = 4.36974789916 times.

    Now we can finally calculate the days of Inventory by dividing the days in a year by the Turnover ratio. We will assume a 365 year.

    = 365/4.36974789916

    = 83.53 days.

    It takes 83.53 days on average does it take to sell the inventory.
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Home » Business » The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is. 71. How many days on average does it take to sell the inventory
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