Question

A firm has $100 of average inventory, operating profit of $500 and sales of $1,500. What will be its days in inventory? 36.5 days 24.3 days 73.0 days not enough information

Answer 1

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Answer 2

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The days in inventory is calculated using the following formula:

days in inventory = average inventory / cost of goods sold * 365

In this question,t he average inventory is $100, the cost of goods sold = sales - profit = 1500 - 500 = $1000. Applying the formula:

days in inventory = 100 / 1000 * 365 = 36.5