A firm has $100 of average inventory, operating profit of $500 and sales of $1,500. its days in inventory is:

Days in invetory meDays in Inventory measures the average number of days it takes to turn inventory to sales.

To get the days in inventory the formula is : Days in Inventory = 365/Inventory Turnover

To get the Inventory Turnover the formula is : Inventory Turnover Ratio = Cost of Goods / [ (Beginning Inventory Balance + Ending Inventory Balance) / 2]

Beginning Inventory Balance: $100Ending Inventory Balance: $500Cost of Goods/Sales: $ 1500

Inventory Turnover Ratio = 1500 / [ (100+500) / 2]Inventory Turnover Ratio = 1500/300Inventory Turnover Ratio = 5

Days In Inventory = 365/5Days In Inventory = 73

Answer: 73 days