Communiquez avec les autres et partagez vos connaissances professionnelles

Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.

Suivre

A business has opening and closing inventory of $2000 and $4000. The cost of sales is $250000. What is the inventory turnover in days?

user-image
Question ajoutée par Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date de publication: 2016/06/08
Barkat Ali
par Barkat Ali , Accountant , Abdullah Bin Ahmed Bin Mohd Al Muzahmi Trading

Step (1) Average inventory

Average Inventory = (Opening Inventory + Closing Inventory)/2

Average Inventory = (2000+4000)/2=3000

 Step (2) Inventory turnover ratio

Inventory Turnover Ratio = (Average Inventory) / (Cost of sales)

Inventory Turnover Ratio =3000/250000=0.012

Step (3) days in inventory

Days in Inventory = 365/ (Inventory Turnover Ratio)

 

Days in Inventory =365/0.012=30416

Zaheer uddin Raja
par Zaheer uddin Raja , Accounts Supervisor , Pakistan International Airlines

Avg inventory = (4000+2000)/2 = 3000

Inventory turnover days = 3000*365/250000 = 4.38days (rounded to 4 days as stated by M. Islahi Iqbal)

 

(Dear barkat Ali, you did well initially but at last stage you mistakenly perform division instead of multiplication.)

Mohamad Islahi Iqbal
par Mohamad Islahi Iqbal , Finance Manager , Arabian Vehicles & Trucks Industry Co. Ltd.

Inventory TO ratio =,/(()/2)

                                 =,/

                                 =. times

Inventory TO days = days/.

                                 =4. days. 

Utilisateur supprimé
par Utilisateur supprimé

I agree with the answer of Mr. Barkat Ali 

More Questions Like This