Use the following information for Ephron Company to compute days' sales in inventory for Year 2.
$$\begin{array} { | l | r | r | }
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Net sales } & \$ 547,500& \$ 572,000 \
\hline \text { Cost of goods sold } & 348,500& 370,840 \
\hline \text { Ending inventory } & 75,70& 81,400 \
\hline
\end{array}$$
A) 52.4
B) 82.3
C) 50.5
D) 76.8
E) 79.3

Question

Use the following information for Ephron Company to compute days' sales in inventory for Year 2.
$$\begin{array} { | l | r | r | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Net sales } & \$ 547,500& \$ 572,000 \
\hline \text { Cost of goods sold } & 348,500& 370,840 \
\hline \text { Ending inventory } & 75,70& 81,400 \
\hline
\end{array}$$
A) 52.4
B) 82.3
C) 50.5
D) 76.8
E) 79.3

Quizplus · Accepted Answer

Days' sales in inventory is calculated as (Ending Inventory / Cost of Goods Sold) * 365. For Year 2, it is (75,700 / 348,500) * 365 = 79.3 days.

Use the Following Information for Ephron Company to Compute Days