Saw Ltd's inventory at 30 June 2016 it was $20 000.Sales for the year ended 30 June 2016 were $125 000 and the gross margin was 20 per cent.
-What was the number of days' inventory on hand?

Question

Quizplus · Accepted Answer

The formula to calculate the number of days' inventory on hand is:

(Number of days in the period * Average inventory) / Cost of goods sold

Assuming a year has 365 days, the calculation would be:

(365 * $20,000) / ($125,000 * 0.8) = 73.06

Rounding to the nearest whole number gives us 73 days, which is option A.

Saw Ltd's Inventory at 30 June 2016 It Was $20