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how to calculate the average number of days that inventory was held. Ending inventory is found on the balance sheet and the cost of goods sold is listed on the income statement. Inventory turnover ratio Cost of Goods Sold Average Inventory 300000 50000 6 times.
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You divide 365 days in a year by the inventory turnover ratio. Using the turnover ratio of four you divide 365 days by four annual turns. Round your intermediate calculations and final answer to two decimal places Supporting Materials.
Days inventory outstanding DIO is the average number of days that a company holds its inventory Inventory Inventory is a current asset account found on the balance sheet consisting of all raw materials work-in-progress and finished goods that a before selling it.
The number of days is taken as 365 for a complete accounting year and 90 for a quarter. Calculate the average number of days that inventory was held by Weller Inc. Using the turnover ratio of four you divide 365 days by four annual turns. Thus if we have inventory turnover ratio for the year we can calculate days inventory on hand by dividing number of days in a year ie.
