Asset Management Ratios Rachets R Us Corp.reported sales for 2013 of $200,000.Rachets R Us listed $25,000 of inventory on its balance sheet.Using a 365-day year,how many days did Rachets R Us's inventory stay on the premises? How many times per year did Rachets R Us's inventory turnover?
A)0.125 days, 8 times, respectively
B)0.125 days, 5 times, respectively
C)45.625 days, 8 times, respectively
D)45.625 days, 5 times respectively

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Sales divided by Inventory, which is $200,000 / $25,000 = 8 times. Days in inventory is calculated as 365 days divided by inventory turnover, which is 365 / 8 = 45.625 days.