Question

Stoney Brooke, Inc., has sales of $1,090,000 and cost of goods sold of $810,300. The firm had a beginning inventory of $48,000 and an ending inventory of $63,000. What is the length of the inventory period

Answer 1

28.38 days

Step-by-step explanation:

The length of the inventory period is an asset management ratio that measures the time it takes to sell the Inventory.

This is calculated as follows :

length of the inventory period = Inventory ÷ (Cost of Goods Sold/ 365)

The inventory can be average of the beginning and end balance or we can take the ending balance. In this instance i will use the ending inventory balance.

Therefore,

length of the inventory period = $63,000 ÷ ($810,300 / 365)

= 28.38 days