Skip to content

CS Executive · Corporate Accounting and Financial Management · Financial Statement Analysis

Aarav Traders has opening inventory of ₹80,000, closing inventory of ₹1,20,000 and cost of goods sold of ₹6,00,000. Its inventory holding period, taking a year as 365 days, is closest to:

The inventory holding period is about 61 days. Average inventory is ₹1,00,000, so turnover on COGS of ₹6,00,000 is 6 times, and 365 divided by 6 gives roughly 61 days.

  1. A61 days
  2. B73 daysCorrect
  3. C122 days
  4. D146 days

Explanation

Average inventory = (80,000 + 1,20,000)/2 = ₹1,00,000. Turnover = 6,00,000/1,00,000 = 6 times. Holding period = 365/6 ≈ 61 days. Wait: 365/6 = 60.8, so 61 days is correct.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statement Analysis shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statement AnalysisFree diagnostic mock

More Financial Statement Analysis questions