A company has sales of $5,737,000, a gross profit ratio of 35%, ending merchandise inventory of $361,425, and total current assets of $5,539,600. What is the days sales' in inventory ratio for the year?

Hi there! Thank you for the opportunity to help you with your question!

First, we need to get the Cost of Goods Sold (COGS). This is done from the information that the gross profit ratio is 35%. We have that:

0.35 = (sales - COGS)/sales. The sales was 5,737,000, which gives COGS =3,729,050.

The inventory ratio is COGS/inventory = 3,729,050/361,425 = 10.3176

Now days sales' inventory is given by (1/10.3176 ) * 365 days = 35.37 days

Thank you

Secure Information

Content will be erased after question is completed.

Enter the email address associated with your account, and we will email you a link to reset your password.

Forgot your password?

Sign Up