While finding out average age of inventory if in the question its given that the company started working on 1st august (following a financial year) and we need to find out average age of say inventory for the year then the days of the year for finding out the average age of inventory will be 365 only or less?
Explain.
Dear Student,
Average age of inventory is the average number of days that the firm shall require in selling its inventory.
But here, as the company has started its business on 1st August, therefore the number of days will be 243 (Aug 1- Mar 31).
Average age of inventory is the average number of days that the firm shall require in selling its inventory.
But here, as the company has started its business on 1st August, therefore the number of days will be 243 (Aug 1- Mar 31).