Ottawa, Inc. provides the following dа ta: 2019 2018 Cash $23,000 $22,000 Accounts Receivable, Net 37,000 37,000 Merchandise Inventory 55,000 25,000 Property, Plant, and Equipment, Net 127,000 96,000 Total Assets $242,000 $180,000 For the year ending December 31, 2019: Net Credit Sales $300,000 Cost of Goods Sold (170,000) Gross Profit $130,000 Calculate the days' sales in inventory for 2019. (Use 365 days for any calculations. Round any intermediate calculations and your final answer to two decimal places.)

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Business

Ware

6 April, 18:15

Ottawa, Inc. provides the following dа ta: 2019 2018 Cash $23,000 $22,000 Accounts Receivable, Net 37,000 37,000 Merchandise Inventory 55,000 25,000 Property, Plant, and Equipment, Net 127,000 96,000 Total Assets $242,000 $180,000 For the year ending December 31, 2019: Net Credit Sales $300,000 Cost of Goods Sold (170,000) Gross Profit $130,000 Calculate the days' sales in inventory for 2019. (Use 365 days for any calculations. Round any intermediate calculations and your final answer to two decimal places.)

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Answers (1)

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Giancarlo Morales · Answer 1

The days' sales in inventory for 2019 is 85.88 days

Explanation:

For computing the days' sales in inventory first we have to compute the inventory turnover ratio.

Inventory turnover ratio = Cost of goods sold : average inventory

where,

Average inventory = (Opening balance of inventory + ending balance of inventory) : 2

= ($25,000 + $ 55,000) : 2

= $40,000

And, the cost of good sold is $170,000

Now put these values to the above formula

So, the answer would be equal to

= $170,000 : $40,000

= 4.25 times

Now days sales inventory = Total number of days in a year : inventory turnover ratio

= 365 days : 4.25 times

= 85.88 days