Carey's Department Store had net sales of $20 million and cost of goods sold of $13 million for the year. The beginning inventory for the year was $4 million. The ending inventory for the year was $6 million. What was the days' inventory outstanding? (Round any intermediary calculations to two decimal places and your final answer to the nearest day.)
A)28 days
B)91 days
C)140 days
D)61 days

Question

Quizplus · Accepted Answer

Days' Inventory Outstanding (DIO) is calculated as (Average Inventory / Cost of Goods Sold) * 365. Average Inventory = (Beginning Inventory + Ending Inventory) / 2 = ($4M + $6M) / 2 = $5M. DIO = ($5M / $13M) * 365 = 140 days.

Carey's Department Store Had Net Sales of $20 Million and Cost