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Sagot :
Answer:
The number of days' sales in inventory is 56.44
Days in inventory are calculated by dividing average inventory over a given time by the cost of goods sold (COGS) during that period and multiplying the result by the number of days in the period.
Formula
Days' sales in Inventory = 365 ÷ Inventory turnover
Cost of Goods Sold COGS = $2103696
Inventory in the end (Current) = $340469
Inventory ]in the beginning (Previous) = $310150
First, we need to find out the inventory turnover, by using the following formula
Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
= 2103696 ÷ (3404696 + 310150)/2
= 2103696 ÷ 325309.5
= 6.47
Now, that we have the inventory turnover, the days' sales in inventory are found out by the following formula
Days' sales in Inventory = 365 ÷ Inventory turnover
= 365 ÷ 6.47
= 56.44
Therefore, the days' sales in inventory are 56.44 for the given cost of goods sold of COGS = $ 2103696, Inventory in the end of $340469 and in the beginning of $310150. This means that the firm's inventory sits an average of 56.44 days , before it is sold.
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