Question

Mario's Home Systems has sales of $2,770, costs of goods sold of $2,110, Inventory of $494, and accounts receivable of $425. How many days, on average, does it take Mario's to sell its inventory?

a) 65.09 days
b) 85.45 days
c) 56.00 days
d) 73.52 days
e) 84.28 days

Answer 1

b) 85.45 days

Step-by-step explanation:

Days Sales in Inventory is the formula used to determine the length of time that it will take to sell inventory.

Days Sales in Inventory = Inventory ÷ (Cost of Sales / 365)

therefore,

Days Sales in Inventory = $494 ÷ ($2,110 / 365)

= 85.45 days

thus,

It takes 85.45 days Mario's to sell its inventory.