The following information was available for Metlock, Inc. at December 31, 2017:
beginning inventory $79,000;
ending inventory $134,000;
cost of goods sold $608,000; and
Metlock days in inventory (rounded) in 2017 was (Round intermediate calculation to 1 decimal place, e.g. 1.2.)
(a) 81.1 days.
(b) 44.0 days.
(c) 47.4 days.
(d) 64.0 days.
Turnover ratios are computed by dividing the sales by the average current asset elements i.e. average account receivables and the average inventory. Ratios found using the average of current asset elements has a drawback which is an inherent limitation of the average method.
Answer and Explanation: 1
Matlock's days in inventory (rounded) in 2017 were 64.0 days.
Compute the Matlock's days in inventory as follows: -
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fromChapter 6 / Lesson 13
Inventory turnover is the ratio of how much a company has sold its products and replaced its supply during a specific period of time. Learn more about the definition of inventory turnover, formulas used for computing it, and the calculation steps for determining it.