Answer:
b. 121.7 days.
Explanation:
Days in inventory formula tells how many days a firm wait for its inventory to convert into sales.
So let us look at the formula of Days in Inventory;
Days in Inventory = [tex]\frac{365}{Inventory Turnover}[/tex]
To find the days in inventory first we need to find Inventory Turnover which can be calculated by the following formula;
Inventory Turnover = [tex]\frac{COGS}{Average Inventory}[/tex]
Inventory Turnover = [tex]\frac{285,000}{95,000}[/tex]
Inventory Turnover = 3 times
Lets put the value of Inventory Turnover in the Days in Inventory formula above, as;
Days in Inventory = [tex]\frac{365}{3}[/tex]
Days in Inventory = 121.7 days
This means that in a year the days it takes a Carlos Company to transform the inventory into finished goods is 121.7 days.
