Question

Sesame International held an average inventory of $6864000 (raw materials, work-in-process, finished goods) last year. Its sales were $7530000, and its cost of goods sold was $3129000. The firm operates 300 days a year. What is the number of days of inventory Sesame is holding?

Answer 1

To calculate the number of days of inventory Sesame is holding, use the formula: Days of Inventory = (Average Inventory / Cost of Goods Sold) x Number of Operating Days. Sesame International is holding approximately 657.51 days of inventory.

Step-by-step explanation:

To calculate the number of days of inventory Sesame is holding, we can use the formula:

Days of Inventory = (Average Inventory / Cost of Goods Sold) x Number of Operating Days

Plugging in the given values, we have:

Days of Inventory = ($6,864,000 / $3,129,000) x 300

Days of Inventory = 2.1917... x 300 = 657.51

Therefore, Sesame International is holding approximately 657.51 days of inventory.