Calculate the inventory-to-sale conversion period based on the following information: average inventories = $110,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $173,000; and net sales = $365,000.

Question

Rory Browning

Business

26 January, 05:41

Calculate the inventory-to-sale conversion period based on the following information: average inventories = $110,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $173,000; and net sales = $365,000.

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Answers (1)

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Matilda Mcclure · Answer 1

232.08 days

Explanation:

Inventory to sales conversion period is the average length of time it will take a business to sell its stock items and then replace them. It give s an indication of patronage from customers and the shorter the better.

It is determined as follows:

Average inventory period

= (Average inventory/cost of goods sold) * 365 days

= (110,000/173,000) * 365 days

= 232.08 days

It takes on the average 232.08 days to sell and replace stock