Question

​Lionworks, Inc. has goods available for sale in the amount of​ $123,000; beginning inventory is​ $41,000; ending inventory is​ $38,000; and cost of goods sold is​ $80,000. How many days could Lionworks operate without buying any more​ inventory? (Round any intermediary calculations two decimal​ places, X.XX, and your final answer to the nearest​ day.)

Answer 1

DSI = 180.21 DAYS.

Step-by-step explanation:

Average inventory = [(open) inventory +(end) inventory] / 2

= (41000+38000)/2 = 39500

As we know that : Days sales of inventory (DSI)= ( Average inventory / cost of goods sold) * 365

= (39500 / 80000 ) * 365

= 180.21 days. It tells the effectiveness of company inventory management,here lionworks takes 180 average days to sell of his entire inventory