What is the inventory conversion period for O'Brian's if it has sales of $320,000, an average inventory of $5,333, and a cash conversion cycle of 20 days? Assume the cost of sales is 55% of sales.
A) 6 days
B) 11 days
C) 13.5 days
D) 15 days

Question

Quizplus · Accepted Answer

The inventory conversion period is calculated as (Average Inventory / Cost of Sales per Day). Cost of Sales is 55% of $320,000, which is $176,000. Daily Cost of Sales is $176,000 / 365 = $482.19. Inventory Conversion Period = $5,333 / $482.19 ≈ 11 days.

What Is the Inventory Conversion Period for O'Brian's If It