A company began the year with $150,000 in inventory and ended the year with $170,000 in inventory.Cost of goods sold for the year amounted to $960,000.Assuming 360 days in a year,how long,on average,does it take the company to sell its inventory (to the nearest day)?
A)6 days
B)60 days
C)120 days
D)3 days

Question

Quizplus · Accepted Answer

Average inventory for the year = (Beginning inventory + Ending inventory) / 2
= ($150,000 + $170,000) / 2
= $160,000

Inventory turnover ratio = Cost of goods sold / Average inventory
= $960,000 / $160,000
= 6

Number of days to sell inventory = 360 days / Inventory turnover ratio
= 360 days / 6
= 60 days

Therefore, the answer is B) 60 days.

A Company Began the Year with $150,000 in Inventory and Ended