Question

​Ottawa, Inc. provides the following​ data: 2019 2018 Cash Accounts​ Receivable, Net Merchandise Inventory ​Property, Plant, and​ Equipment, Net Total Assets For the year ending December​ 31, 2019: Net Credit Sales Cost of Goods Sold ​(​) Gross Profit Calculate the​ days' sales in inventory for 2019.​ (Use 365 days for any calculations. Round any intermediate calculations and your final answer to two decimal​ places.)

Answer 1

days sales in inventory = 85.88 days

Step-by-step explanation:

The numbers are missing, so I looked for a similar question:

"Ottawa, Inc. provides the following data: 2019 2018 Cash $23,000 $22,000 Accounts Receivable, Net 37,000 37,000 Merchandise Inventory 55,000 25,000 Property, Plant, and Equipment, Net 127,000 96,000 Total Assets $242,000 $180,000 For the year ending December 31, 2019: Net Credit Sales $300,000 Cost of Goods Sold (170,000) Gross Profit $130,000"

first we must determine the inventory turnover ratio:

inventory turnover ratio = COGS / average inventory

average inventory = ($55,000 + $25,000) / 2 = $40,000

COGS = $170,000

inventory turnover ratio = $170,000 / $40,000 = 4.25

days sales in inventory = 365 / inventory turnover ratio = 365 / 4.25 = 85.88 days