CAF-7 · Chapter 12 · Question 9 of 15
A firm has an average inventory of Rs. 400,000, average trade receivables of Rs. 300,000, and average trade payables of Rs. 200,000. If its annual Cost of Sales is Rs. 2,000,000, what is its Inventory Turnover Period (assuming a 365-day year)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 73 days
Explanation
Inventory Turnover Period (Inventory Days) = (Average Inventory / Cost of Sales) * 365. Calculation: (400,000 / 2,000,000) * 365 = 73 days.
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