Days' sales in inventory is calculated by
A)Ending inventory divided by cost of goods sold times 365
B)Dividing cost of goods sold by merchandise inventory
C)Dividing merchandise inventory by cost of goods sold
D)Cost of goods sold divided by ending inventory times 365
E)Ending inventory divided by cost of goods sold

Question

Quizplus · Accepted Answer

Days' sales in inventory is calculated by taking the ending inventory, dividing it by the cost of goods sold, and then multiplying by 365. This formula gives the average number of days it takes for a company to turn its inventory into sales.

Days' Sales in Inventory Is Calculated by