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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
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.)
Inventory TO ratio =,/(()/2)
=,/
=. times
Inventory TO days = days/.
=4. days.
I agree with the answer of Mr. Barkat Ali