CIMA BA3 · Chapter 13 · Question 7 of 10
A company holds inventory of $27,000 at the year end. Cost of sales for the year was $219,000 and revenue was $292,000. What is the inventory holding period (to the nearest day)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 45 days
Explanation
Inventory holding period = inventory / cost of sales x 365 = $27,000 / $219,000 x 365 = 45.0, i.e. 45 days. Inventory is held at cost, so cost of sales (not revenue) is used. Option B (8) is the inventory turnover in times ($219,000 / $27,000 = 8.1), not a period in days.
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