Average age of inventory can be calculated as inventory divided by 365.

Question

Quizplus · Accepted Answer

The average age of inventory is typically calculated as the average inventory period, which is the number of days it takes for a company to sell off its inventory. It is usually calculated using the formula: (Average Inventory / Cost of Goods Sold) * 365. Dividing inventory directly by 365 does not provide a meaningful measure of how quickly inventory is sold.

Average Age of Inventory Can Be Calculated as Inventory Divided