Questions: Mario's Home Systems has sales of 2,820, costs of goods sold of 2,160, inventory of 504, and accounts receivable of 430. How many days, on average, does it take Mario's to sell its inventory? Assume a 365-day year.

Solution Steps

To find the average number of days it takes Mario's Home Systems to sell its inventory, we need to calculate the inventory turnover ratio and then convert it into days. The inventory turnover ratio is calculated by dividing the cost of goods sold by the inventory. Once we have the turnover ratio, we can find the average days to sell the inventory by dividing 365 days by the inventory turnover ratio.

The inventory turnover ratio is calculated using the formula:

\[ \text{Inventory Turnover Ratio} = \frac{\text{Cost of Goods Sold}}{\text{Inventory}} = \frac{2160}{504} \approx 4.2857 \]

To find the average number of days it takes to sell the inventory, we use the formula:

\[ \text{Average Days to Sell Inventory} = \frac{365}{\text{Inventory Turnover Ratio}} = \frac{365}{4.2857} \approx 85.1667 \]

Final Answer