Answer:
Inventory turnover period in 2019 =89.3 days
Explanation:
The inventory turnover period also known as the inventory days is the average length of time it takes business to sell its stocks and replace same. The shorter the better as it indicates a high patronage from customers.
It is calculated as follows:
Inventory turnover = (Average inventory / cost of goods ) × 365 days
Note that,
average inventory =( opening inventory + closing inventory)/2
Average inventory = (218,000 + 198,000)/2 = 208,000
Cost of goods sold in 2019 = $850,000
Inventory turnover period = (208,000/850,000)× 365 days
=89.3 days
Answer:
The average number of days to sell its inventory is 89.3 days
Explanation:
The formula for computing inventory turnover ratio is given as average inventory/cost of goods sold *365
average inventory =opening inventory+closing inventory/2
opening inventory is $218,000
closing inventory is $198,000
average inventory=($218,000+$198,000)/2
=$208000
cost of goods sold is $850,000
average inventory ratio=$208,000/$850,000*365
=89.3 days
