Assume that the net sales for a company is $5,000, cost of goods sold is $3,000, and average inventory is $1,500. calculate the number of days' sales in inventory.

182.5 days

Explanation:

Number of days' sales in inventory is the average time it takes an entity to convert inventory into sales.

It is given by the ratio of the average inventory to the cost of goods sold then multiplied by the number of days in the period.

Given;

Cost of goods sold is $3,000 and average inventory is $1,500,

Number of days' sales in inventory = ($1,500/$3,000) × 365 days

Where the number of days in the year is 365.

Number of days' sales in inventory = 182.5 days