Paul's Manufacturing has sales of $810,000. The cost of goods sold is equal to 80% of sales. The ﬁrm has an average inventory of $11,500. How many days on average does it take the ﬁrm to sell its
Inventory?

Question

Quizplus · Accepted Answer

Cost of goods sold = 80% of sales = 0.8*$810,000 = $648,000
Inventory turnover ratio = Cost of goods sold / Average inventory = $648,000 / $11,500 = 56.35
Days in inventory = 365 / Inventory turnover ratio = 365 / 56.35 = 6.48 days (approx.) Therefore, the answer is C) 6.48 days.

Paul's Manufacturing Has Sales of $810,000