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40. Your firms cost of goods sold (COGS) average $1,600,000 per month, and it keeps inventory equal to 55% of its monthly CO
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1) YOUR FIRMS COST OF GOODS SOLD AVERAGE $1600000 PER MONTH AND IT KEEPS INVENTORY EQUAL TO 55% OF ITS MONTHLY COGS ON HAND ALL TIMES USING 365 DAY YEAR WHAT IS ITS INVENTORY CONVERSION PERIOD?

1,11.7 DAYS

2.13.4 DAYS

3.14.4 DAYS

4.15.2 DAYS

5.18,2 DAYS

A) Initially the cost of goods sold should be determined and the inventory equals to 55% that is mostly more than half of the average that is $1600000/2.25=711111.1 so further moving into the conversion rate that is given for 1 year which is 365 days so for 12 months now by the virtue we got 711111.1 as the resultant for COGS.But the thing is that it was made as average for month so if we find out the conversion rate for one month will be the answer as $1600000/12=13.33 it is equivalent to 13.4 days so option 2 is the answer and remaining cannot be answers as they are more than the answers as stated so for 365 days the conversion rate is 13.4 days.

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