A firm has 100 of average inventory operating profit of 500

A firm has $100 of average inventory, operating profit of $500 and sales of $1,500. What will be its days in inventory?

36.5 days

24.3 days

73.0 days

Not enough information

Solution

Days in Inventory = 365 Days / Inventory Turnover Ratio

Inventory Turnover Ratio

= Sales / Average Inventory

= $1,500 / $100

= 15 Times

Days in Inventory = 365 Days / Inventory Turnover Ratio

= 365 Days / 15 Times

= 24.3 days

Hence, The Answer is “24.3 days”