The financial ratio days' sales in inventory is measured as:
A)365 days divided by the inventory turnover.
B)inventory times 365 days.
C)365 days divided by the inventory.
D)inventory plus cost of goods sold, divided by 365 days.
E)inventory turnover plus 365 days.

Question

Quizplus · Accepted Answer

Days' sales in inventory is calculated by dividing the number of days in a year by the inventory turnover ratio. This gives the number of days it takes for a company to sell its inventory. Therefore, the correct option is A. B, C, D and E are incorrect.

The Financial Ratio Days' Sales in Inventory Is Measured As