Pretty, Inc provides the following data
2017 2016
Cash $28,000 $21,000
Accounts Receivable, Net 40,000 40,000
Merchandise Inventory 53,000 30,000
Property, Plant, and Equipment, Net 124,000 91,000
Total Assets $245,000 $182,000
Net Credit Sales $240,000
Cost of Goods Sold (130,000 )
Gross Profit $110,000
Calculate days' sales in inventory for 2017. (Round any intermediate calculations and your final answer to two decimal places.)
A) 84.23
B) 148.81
C) 63.11
D) 116.61
D .D)
Inventory turnover ratio = Cost of Goods Sold / Average Merchandise Inventory =
$130,000 / [(53,000 + 30,000 ) / 2] = $130,000 / $41,500 = 3.13 times
Days' sales in inventory = 365 / Inventory turnover ratio = 365 / 3.13 = 116.61
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