Oceonic inventory turnover ratio is 12.Its inventory conversion period is [blank].
A)12 days
B)30.4 days
C)2.5 days
D)There is not enough information

Question

Quizplus · Accepted Answer

The formula for inventory turnover ratio is:

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

We are given that the inventory turnover ratio is 12. We can rearrange the formula to solve for Average Inventory:

Average Inventory = Cost of Goods Sold / Inventory Turnover Ratio

We are not given the cost of goods sold or the average inventory, so we can't solve for the inventory conversion period directly. However, we can use the inventory turnover ratio to estimate the inventory conversion period:

Inventory Turnover Ratio = 365 days / Inventory Conversion Period

We can rearrange this formula to solve for Inventory Conversion Period:

Inventory Conversion Period = 365 days / Inventory Turnover Ratio

Substituting our given inventory turnover ratio of 12 into this equation, we get:

Inventory Conversion Period = 365 days / 12 = 30.4 days

Therefore, the best choice is B) 30.4 days.

Oceonic Inventory Turnover Ratio Is 12