Asked by Jamison Eddleman on Jun 21, 2024
Verified
Zhang Company reported Cost of goods sold of $835,000,ending Inventory of $41,750,and Net sales of $2,338,000.The Days' sales in inventory (rounded to whole days) is:
A) 18 days.
B) 418 days.
C) 7 days.
D) 56 days.
E) 20 days.
Days' Sales in Inventory
A financial ratio that indicates the average time in days that a company takes to turn its inventory into sales.
Ending Inventory
The overall value of products for sale at the close of a fiscal period.
Cost of Goods Sold
Directly associated expenditures for producing the goods a business sells, including the cost of materials and labor.
- Comprehend the idea and importance of days' sales uncollected and days' sales in inventory in the context of business operations.
Verified Answer
VR
Valeria RiveraJun 24, 2024
Final Answer :
A
Explanation :
Days' sales in inventory is calculated as (Ending Inventory / Cost of Goods Sold) * 365. Using the given figures: ($41,750 / $835,000) * 365 = 18.2, which rounds to 18 days.
Learning Objectives
- Comprehend the idea and importance of days' sales uncollected and days' sales in inventory in the context of business operations.