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17 November, 11:17

SuperAmazona has ending inventory of $200,000, and cost of goods sold for the year just ended was $1,410,000. On average, how long does a unit of inventory sit on the shelf before it is sold?

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  1. 17 November, 11:23
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    On average, there are 51.77 days, a unit of inventory sit on the shelf before it is sold.

    Explanation:

    Super Amazona has ending inventory of $200,000, and cost of goods sold for the year just ended was $1,410,000.

    Inventory turnover ratio = Cost of Goods Sold/Inventory = $1,410,000/$200,000 = 7.05 times

    The number of days a unit of inventory sit on the shelf before it is sold = 365/Inventory turnover ratio = 365/7.05 = 51.77 days
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