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Average Days in Inventory = Average Inventory Average Daily Cost of Goods Sold This ratio indicates the average number of days the company holds its
Average Days in Inventory = Average Inventory Average Daily Cost of Goods Sold This ratio indicates the average number of days the company holds its inventory before sale. A higher ratio indicates a company's inefficiency in selling its inventory. The ratio is computed by dividing the average inventories / merchandise inventories during the year (average inventory = average of the beginning balance of inventory and ending balance of inventory) divided by the daily Cost of Goods Sold (also referred to as Cost of Sales or Merchandise Costs or Cost of Products Sold). Assume 365 days in a year. Which of the following 4 companies has the lowest Average Days in Inventory? Best Buy, Inc. (for the year ended January 29, 2022) The Home Depot, Inc. (for fiscal 2021) Amazon.com (for the year ended Dec 31, 2021) Waimart Inc. (for the year ended January 31, 2022)
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