Savory Thymes Inc had net credit sales of 9000000 and cost o

Savory Thymes, Inc. had net credit sales of $9,000,000 and cost of goods sold of $5,250,000 for the year. The average inventory for the year amounted to $1,250,000. The average days in inventory during the year was approximately a. 87 days O b.70 days. C. 65 days. O d. 51 days.

Solution

Average days in inventory = 365/Inventory turnover ratio

Inventory turnover ratio = Cost of good sold/ Average inventory = (5250000/1250000) = 4.20 Times

Average days in inventory = 365/4.2

Average days in inventory = 87 Days .

Option a) is the answer.