Use the table for the question(s)below.
Consider the following balance sheet:
-Luther Corporation's total sales for 2019 were $610.1 million,and gross profit was $109.0 million.Inventory days for 2019 is closest to:
A)27.5.
B)33.4.
C)153.7.
D)10.9.

Question

Use the table for the question(s)below.
Consider the following balance sheet:  
-Luther Corporation's total sales for 2019 were $610.1 million,and gross profit was $109.0 million.Inventory days for 2019 is closest to:
A)27.5. 
B)33.4. 
C)153.7. 
D)10.9.

Quizplus · Accepted Answer

Inventory Days = (Average Inventory / Cost of Goods Sold) * 365

Cost of Goods Sold = Total Sales - Gross Profit = $610.1 million - $109.0 million = $501.1 million

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Beginning Inventory is not given, but Ending Inventory is $56.1 million.

Assuming Beginning Inventory is the same as Ending Inventory,

Average Inventory = ($56.1 million + $56.1 million) / 2 = $56.1 million

Therefore,

Inventory Days = ($56.1 million / $501.1 million) * 365 = 33.4 days (rounded to one decimal place)

The closest option is B) 33.4.

Use the Table for the Question(s)below