Question

The following information was available for Pina Colada Corp. at December 31, 2022:

Beginning inventory $93000
Ending inventory $64000
Cost of goods sold $763805
Sales $1040000.

Pina days inventory turnover ratio in 2022 was: ___________

Answer 1

37.51 days

Step-by-step explanation:

Use the following formula to calculate the Inventory Turnover ratio

Inventory Turnover ratio = Cost of goods sold / Average Inventory

Where

Cost of goods sold = $763,805

Average Inventory = ( Beginning Inventory + Ending Inventory ) / 2 = ( $93,000 + $64,000 ) / 2 = $78,500

Placing values in the formula

Inventory Turnover ratio = $763,805 / $78,500

Inventory Turnover ratio = 9.73

Inventory Days = Numbers of days in a year / Inventory Turnover ratio = 365 / 9.73 = 37.51 days