The following data were taken from Castle, Inc. What is (1) the inventory turnover ratio and (2) the number of days' sales in inventory for Castle Inc.
A) (1) 11.46 times (2) 31.85 days
B) (1) 10.52 times (2) 34.70 days
C) (1) 9.72 times (2) 37.56 days
D) (1) 10.53 times (2) 34.56 days

Question

The following data were taken from Castle, Inc.  What is (1) the inventory turnover ratio and (2) the number of days' sales in inventory for Castle Inc.
A) (1) 11.46 times (2) 31.85 days 
B) (1) 10.52 times (2) 34.70 days 
C) (1) 9.72 times (2) 37.56 days 
D) (1) 10.53 times (2) 34.56 days

Quizplus · Accepted Answer

(1) Inventory turnover = Cost of goods sold/Average inventory
Inventory turnover = $894,000/[($78,000 + $92,000)/2]
Inventory turnover = 10.52
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(2) Number of days' sales in inventory = Average inventory/Average daily cost of goods sold
Number of days' sales in inventory = $85,000/($894,000/365)
Number of days' sales in inventory = 34.70 days
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The Following Data Were Taken from Castle, Inc