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

The inventory turnover ratio is calculated as sales divided by inventory, which is $200,000 / $25,000 = 8 times. The days in inventory is calculated as 365 days divided by the inventory turnover ratio, which is 365 / 8 = 45.625 days.