Question

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer's days in inventory in 2014 was:_________.

A. 24. 3 days
B. 33. 2 days
C. 29 days
D. 37. 2 days

Answer 1

33.2

Step-by-step explanation:

Days in inventory is a ratio that measures the number of days it takes a company to sell off its inventory. It is a financial ratio that expresses time in days that a company requires to turn its inventory, including work-in-progress into sales.

Days in inventory is calculated by the formula below.

Days in inventory = Average Inventory/ Costs of Goods sold x 365

For Bowyer company

average inventory = beginning inventory + Ending inventory / 2 x

=$90,000 +$70,000 /2

=$80,000

Days in inventory = $80,000/$880,000 x 365

=0.09090 x 365

= 33.18 days