Question

Shay Hand Outfitters has sales of $2,900, costs of goods sold of $2,240, inventory of $520, and accounts receivable of $438. How many days, on average, does it take the company to sell its inventory

Answer 1

85 days

Step-by-step explanation:

The computation of the number of days that takes for selling the inventory is shown below:

As we know that

Days sells to inventory = 365 days ÷ inventory turnover ratio

where,

Inventory turnover ratio is

= Cost of goods sold ÷ inventory

= $2,240 ÷ $520

= 4.31 times

Now the days sells to inventory is

= 365 ÷ 4.31

= 85 days