Famous Farm's payables deferral period (PDP) is 40 days (on a 365-day basis), accounts payable are...

Famous Farm's payables deferral period (PDP) is 40 days (on a 365-day basis), accounts payable are $120 million, and its balance sheet shows inventory of $208 million. What is the inventory turnover ratio?

Expert Solution

COGS = (365 * Payables) / DSO = (365 * $120 million) / 40 days = $1,095 million

Inventory turnover = COGS/Inventory = $1,095 million/$208 million = 5.26

jeff jeffy answered 2 years ago

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