Calculate the inventory-to-sale conversion period based on the following information: average inventories = $120,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $182,500; and net sales = $365,000.
A)240 days
B)180 days
C)90 days
D)60 days

Question

Quizplus · Accepted Answer

Inventory-to-sale conversion period = (Average inventories ÷ Cost of goods sold) × 365

= ($120,000 ÷ $182,500) × 365

= 240 days

Therefore, the correct choice is A) 240 days.

Calculate the Inventory-To-Sale Conversion Period Based on the Following Information