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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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  1. 26 January, 05:59
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    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
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