Instagram Post Solution 8/17

The first step is to calculate the inventory turnover ratio.

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Balance

$800,000 / $80,000 = 10.0

Then, take the number of days in the year and divide it by the inventory turnover ratio.

365 / 10.0 = 36.5 Days

Typically, that's how long you'll have to store inventory before selling it to the customer.

 

 

 

 


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