Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

What will be the average age of inventory if the inventory turnover ratio is 8 times?

Options:

43 days

44 days

46 days

48 days

Correct Answer:

46 days

Explanation:

The correct answer is option 3- 46 days.

Average age of inventory = Days in a year/Inventory Turnover Ratio
                                   
        = 365/8 
                                           = 45.63
                                           = 46 days