Alonzo Company in Italy prepares its financial statements in accordance with IFRS. In 2014, it reported cost of goods sold of €600 million and average inventory of €100 million. What is Alonzo's inventory turnover ratio?
A) 6 days
B) 16.7 days
C) 60.8 days
D) 30.4 days

Question

Quizplus · Accepted Answer

The inventory turnover ratio is calculated as Cost of Goods Sold / Average Inventory. For Alonzo Company, this is €600 million / €100 million = 6 times per year. To convert this into days, divide the number of days in a year (365) by the turnover ratio: 365 / 6 = 60.8 days.

Alonzo Company in Italy Prepares Its Financial Statements in Accordance