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

Question

Quizplus · Accepted Answer

Days' sales in inventory is calculated by dividing the number of days in a year (365) by inventory turnover. This ratio indicates the average number of days it takes for a company to sell its inventory.

The Financial Ratio Days' Sales in Inventory Is Measured As