Tefft Industries has an average inventory of $170,000, sells on terms of 2/10, net 30, and its cost of sales is $540,000. What is Tefft's inventory conversion period?
A) 85 days
B) 115 days
C) 105 days
D) cannot be determined from the data given

Question

Quizplus · Accepted Answer

The inventory conversion period is calculated as (Average Inventory / Cost of Sales) * 365. For Tefft Industries, it is ($170,000 / $540,000) * 365 = 114.81 days, which rounds to 115 days.

Tefft Industries Has an Average Inventory of $170,000, Sells on Terms