Answer: 118.08 days
Explanation:
Days in inventory (DIY) measures the average number of days a firm inventory is tied up ie the number of days it takes for a company to turnover inventory.
It is calculated as
DIY= Average inventory/Cost of goods sold X Number of days in an Accounting period
Where average inventory is $187,400
Cost of goods sold is $579,300
Number of days in an accounting period is 365 days
DIY= 187,400/579,300 x 365
DIY= 68401000/579300
DIY= 118.08 days
Answer:
18.08 days
Explanation:
The number of days it takes a firm to sell its inventory is referred to as inventory period, days in inventory, or days inventory outstanding.
Inventory period is an efficiency ratio that also shows the number of days that inventory ties down funds, and it can be calculated as follows:
Inventory period = 365 days ÷ ITR …………………….. (1)
Where;
ITR = Inventory turnover ratio = Cost of goods sold ÷ Inventory
= $579,300 ÷ $187,400
ITR = 3.09124866595518
Substituting 3.09124866595518 for ITR into equation (1), we have:
Inventory period = 365 days ÷ 3.09124866595518 = 118.08 days approximately.
Therefore, it takes the Up-Towner 118.08 days, on average, to sell its inventory.
