Inventory Turnover in Days

Steps:

• Calculate Cost of Goods Sold (COGS): Opening inventory $80,000 + Total purchases$740,000 + Carriage inwards $20,000 - Closing inventory$60,000 = $780,000.
• Compute average inventory: ($80,000 +$60,000) / 2 = $70,000.
• Determine turnover ratio: $780,000 /$70,000 ≈ 11.14 times.
• Convert to days: 365 / 11.14 ≈ 33 days.

Why C is correct:

• Matches the formula for inventory turnover period: 365 / (COGS / average inventory), yielding exactly 33 days.

Why the others are wrong:

• A: Underestimates by ignoring carriage inwards in COGS, resulting in ~29 days.
• B: Uses total sales instead of COGS for ratio, giving ~32 days.
• D: Applies 360-day year or misaverages inventory, producing ~35 days.

Final answer: C