Devin Inc. has an inventory turnover ratio of 35. Devin's average number of day's inventory is:
A)Less than 10.
B)Between 10 and 12.
C)More than 12.
D)Unable to be determined based on this limited information.

Question

Quizplus · Accepted Answer

Inventory turnover ratio = COGS / Average inventory

35 = COGS / Average inventory

Therefore, Average inventory = COGS / 35

We do not have information regarding the COGS, so we cannot determine the exact number of days for the average inventory. However, we can estimate it within a range by assuming that the inventory is turned over approximately 10-12 times per year (since the ratio is 35). This would imply that the average inventory is held for approximately 30-36 days (365 days / 12 = 30.4 days per turnover). Hence, the answer will be (B) "Between 10 and 12".

Devin Inc Has an Inventory Turnover Ratio of 35