All Stars, Inc. has inventory of $44,233 and cost of goods sold of $512,902. The company has an operating cycle of 74 days. What is the firm's days' sales outstanding (DSO)? Round your answers to the nearest whole number.

Question

Quizplus · Accepted Answer

DSO is calculated as (Inventory / Cost of Goods Sold) * Operating Cycle. Plugging in the numbers: (44,233 / 512,902) * 74 = 6.35, rounding to the nearest whole number gives 6 days. However, the calculation provided is incorrect for DSO; it mistakenly calculates inventory turnover in days. The correct formula for DSO should involve accounts receivable, not inventory. Given the information and choices provided, there seems to be a misunderstanding in the question's premise as DSO calculation requires accounts receivable data, not inventory. Without the correct data or formula application, the provided answer choices cannot be accurately evaluated based on the standard DSO calculation method.