Question

A company has $72,500 in inventory at the beginning of the accounting period and $65,500 at the end of the accounting period. Sales

revenue is $986,400, cost of goods sold is $572,700, and net income is $124,200 for the accounting period. On average, this company has
inventory on hand for approximately:
61 days.
44 days
26 days
203 days​

Answer 1

= 44 days

Step-by-step explanation:

Days’ of inventory on hand measures the number of days a business takes to sell its average balance of inventory.

Days of inventory = average inventory/cost of goods sold x 365 days.

For this company:

opening stock: $ 72, 500

closing stock: $ 65, 500

cost of goods sold: $ 572 700

Average inventory =72500+65500/2

= $ 69,000.00

Days of inventory =69,000/572 700x365

= 43.975

= 44 days