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

Question

Quizplus · Accepted Answer

Days' sales in inventory is calculated by dividing ending inventory by the cost of goods sold and multiplying the result by 365. This ratio represents the number of days it takes for the company to sell its inventory.

Days' Sales in Inventory Is Calculated As