Question
In: Finance
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
= 14.6480
14.65
days.
Hence, the answer is option c.
In case of any query, kindly comment on the solution
jeff jeffy answered 1 year agoRelated Solutions
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