inventory ...

A7X corporation has ending inventory of $705273 and cost of goods sold for the year just ended was $8,135,165

a. What is the inventory turnover? 

Inventory turnover _______ times

b. What is the days sales in inventory

Days sales in inventory______ days

c. How long on average did a unit of inventory sit on the shelf before it was sold? 

Days on shelf______ days




Ending inventory for a company generally indicates the balance goods which are available for sales & it is held by the company at the end of a particular accounting period. Cost of goods sold on the other hand refers to direct costs of producing the goods that are to be sold by the company.


a) Inventory turnover ratio: This ratio indicates the number of times the goods have been sold or replaced by the company during a particular period.

Inventory turnover ratio = Cost of goods sold/Average inventory

Beginning inventory is not available to find the average inventory. Hence the ending inventory value can be used

Inventory turnover ratio = 8,135,165/705,273 = 11.53 times.

Day sales in inventory = 365*ending inventory/cost of goods sold

Day sales inventory = 365*705,273/8,135,165 = 257,424,645/8,135,165 = 31.64 days

Hence the unit would take 31.64 days in the shelf before being sold.

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