Life Industries has sales of $46,230, costs of goods sold of $27,742.50, inventory of $675, and accounts receivable of $2,300. How many days, on average, does it take Life Industries to sell the inventory and collect the payment on the sale?

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Quizplus · Accepted Answer

To calculate the average days it takes for Life Industries to sell the inventory and collect the payment, we need to find the inventory turnover days and the accounts receivable turnover days and then add them together.1. Inventory Turnover Days = (Inventory / Cost of Goods Sold) * 365   = ($675 / $27,742.50) * 365   = 0.0243 * 365   = 8.87 days (approximately)2. Accounts Receivable Turnover Days = (Accounts Receivable / Sales) * 365   = ($2,300 / $46,230) * 365   = 0.0497 * 365   = 18.17 days (approximately)Adding both gives us 8.87 + 18.17 = 27.04 days.

Life Industries Has Sales of $46,230, Costs of Goods Sold