Question

Micro manufacturing company’s sales revenue amounted to 4,400,000 during the year. Ko sold as a percentage of sales with 35%. Beginning inventory sales was 360,000 and ending inventory was 345,000. The companies inventory turnover was 4.37 for the year. Assuming 365 days a year, what was the company’s average sale period For the year?

Answer 1

To find the company's average sale period, one must first calculate the average inventory and then divide 365 by the inventory turnover rate, which results in approximately 83.52 days.

Step-by-step explanation:

The student's question pertains to the calculation of a company's average sale period using given financial data. First, we may calculate the average inventory for the year using the formula (beginning inventory + ending inventory) / 2. Then, using the inventory turnover rate, we can find the average days to sell the inventory, which is also known as the average sale period.

This is calculated using the formula 365 / inventory turnover rate.

To illustrate, the average inventory for the company is (360,000 + 345,000) / 2 = 352,500.

The inventory turnover rate is given as 4.37.

Thus, the average sale period is 365 / 4.37 = 83.52, rounded to two decimal points.

The company's average sale period for the year is approximately 83.52 days.