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NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis

A company's inventory turnover is 8 times based on cost of goods sold of Rs 480 crore. Assuming a 365-day year, its days of inventory on hand are closest to:

Days of inventory on hand are about 46. This is 365 divided by the inventory turnover of 8 times, which gives roughly 45.6 days. The figure of Rs 60 crore is the average inventory value, not a number of days.

  1. A46 daysCorrect
  2. B8 days
  3. C60 days
  4. D30 days

Explanation

Days of inventory = 365 / inventory turnover = 365/8 = 45.6, about 46 days. Average inventory is 480/8 = Rs 60 crore, so 60 is a number mistaken for days. Dividing 365 by 12 would give about 30.

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