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7 June, 13:19

SQC Inc. had sales of $3,000,000, cost of merchandise sold of $2,100,000, and average inventory of $140,000. What is SQC Inc.'s days' sales in inventory? (Round the answer to the nearest whole number.)

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  1. 7 June, 14:14
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    Days' sales in inventory = 24 days.

    Explanation:

    We know,

    Days' sales in inventory = 365 : Inventory Turnover

    Given,

    Inventory Turnover = Cost of goods sold (cost of merchandise sold) : Average inventory

    Inventory Turnover = $2,100,000 : $140,000

    Inventory Turnover = 15 times

    Therefore,

    Days' sales in inventory = 365 : 15 times

    Hence, Days' sales in inventory = 24.33 days

    Days' sales in inventory = 24 days.

    Days' sales in inventory indicates that within 24 days, the company can sell the inventory.
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