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Frosty's Frozen Food Inc.'s inventory balance is $1.22 million. Frosty's Cost of Good's Sold is $30.4...

Frosty's Frozen Food Inc.'s inventory balance is $1.22 million. Frosty's Cost of Good's Sold is $30.4 million. It's days inventory held period is

  • 12 days.
  • 24.92 days.
  • 14.65 days.
  • 299.2 days.

Solutions

Expert Solution

The inventory turnover is calculated first to solve the question.

Formula for computing inventory turnover ratio:

Inventory Turnover Ratio= Cost of goods sold/Average inventory

                                                 = $30.4 million/ $1.22 million

                                                 = 24.9180 times

Number of days inventory

Number of days of inventory measures the number of days it takes a firm to sell its entire inventory.

Formula for computing number of days of inventory:

Number of days of inventory= 365/Inventory turnover

                                                       = 365/ 24.9180

                                                       = 14.648014.65 days.

Hence, the answer is option c.

In case of any query, kindly comment on the solution

jeff jeffy answered 11 months ago
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