NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis
A company has opening inventory of Rs 90 lakh, closing inventory of Rs 110 lakh, sales of Rs 1,400 lakh and cost of goods sold of Rs 1,000 lakh. Assuming a 365-day year, what is the approximate inventory holding period using average inventory?
Computed correctly, the holding period is about 36.5 days, but this is not offered, so the question is flawed.
- A73 daysCorrect
- B51 days
- C80 days
- D58 days
Explanation
Average inventory = (90+110)/2 = 100 lakh. Turnover = COGS/average inventory = 1000/100 = 10 times. Days = 365/10 = 36.5? Check: 100/1000 x 365 = 36.5 days, so 73 is wrong; the correct value is 36.5 days.
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