ExpertEasy2 marksMultiple Choice
ACCA · Question 26 · Interpretation of Financial Statements
Section B - Case 3
*OmniCart is an e-commerce retailer. The following financial data is available for the years ended 31 December:
20X5:
Revenue: $8,000,000
Cost of Sales: $5,000,000
Inventory: $500,000
Trade Receivables: $800,000
Trade Payables: $600,000
20X4:
Revenue: $6,000,000
Cost of Sales: $3,600,000
Inventory: $400,000
Trade Receivables: $500,000
Trade Payables: $450,000
Assume a 365-day year for all calculations.*
Question:
What is OmniCart's inventory turnover period (in days) for the year ended 31 December 20X5?
Section B - Case 3
*OmniCart is an e-commerce retailer. The following financial data is available for the years ended 31 December:
20X5:
Revenue: $8,000,000
Cost of Sales: $5,000,000
Inventory: $500,000
Trade Receivables: $800,000
Trade Payables: $600,000
20X4:
Revenue: $6,000,000
Cost of Sales: $3,600,000
Inventory: $400,000
Trade Receivables: $500,000
Trade Payables: $450,000
Assume a 365-day year for all calculations.*
Question:
What is OmniCart's inventory turnover period (in days) for the year ended 31 December 20X5?
Answer options:
A.
22.8 days
B.
36.5 days
C.
40.6 days
D.
32.8 days
How to approach this question
Use the formula: (Inventory / Cost of Sales) x 365.
Full Answer
B.36.5 days✓ Correct
Inventory turnover period measures how long inventory is held before being sold. The formula is (Closing Inventory / Cost of Sales) x 365.
For 20X5: ($500,000 / $5,000,000) x 365 = 36.5 days.
Common mistakes
Using Revenue instead of Cost of Sales in the denominator.
Practice the full ACCA FR — Financial Reporting Practice Exam 5
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