Question

Work-Fit's financial statements show cost of goods sold of $10,221 million, ending inventory of $2,889 million, and average inventory of $2,045 million. Calculate Work-Fit's days sales in inventory. (Use 365 days a year.)

Mumple Choice
a) 299
b) 730 days
c) 301
d) 0.3
e) 1032 days

Answer 1

Work-Fit's days sales in inventory is calculated using the formula (Ending Inventory / Cost of Goods Sold) × 365 days. Based on the provided financial figures, the days sales in inventory is approximately 103.2 days, which does not exactly match the provided multiple-choice answers, indicating a possible error in the options.

Step-by-step explanation:

To calculate Work-Fit's days sales in inventory, we use the formula:

Days Sales in Inventory = (Ending Inventory / Cost of Goods Sold) × 365 days

Using the provided figures:

• Cost of Goods Sold (COGS) = $10,221 million
• Ending Inventory = $2,889 million
• Average Inventory = $2,045 million (Not required for this calculation)

Substituting the values into the formula:

Days Sales in Inventory = ($2,889 million / $10,221 million) × 365 days
Days Sales in Inventory = 0.2827 × 365 days
Days Sales in Inventory ≈ 103.2 days

Hence, Work-Fit's days sales in inventory is approximately 103.2 days.

Note that the provided multiple-choice options do not exactly match our calculated value, but the closest one is option c) 301 days, which seems to be an error in the given options.