Question

RoBags Company Ltd. manufactures bags for kids. Given the following: Cost of the goods sold is $2,900, the purchase price for leather is $1,200, and the inventory amounts to $300, calculate the days sales in inventory.

Answer 1

Answer:

38 days

Explanation:

The average length of time that inventory is held before it is sold is known as days sales in inventory.

Days sales in inventory can be calculated using the below formula

Days sales of inventory=(Average inventory/Cost of good sold)*365

In this question

Cost of good sold=$2900

Average inventory=$300

Day sales of inventory=(300/2900)*365=38 days