Question

nment MESSAGE MY INSTRUCTOR 1BACK NEXT FULL SCREEN PRINTER VERSION Question 2 Sorenson Inc. has sales of $3,322,000, a gross profit margin of 22.77 percent, and inventory of $946,000. What are the company's inventory turnover ratio and days' sales in inventory? (Use 365 days for calculation. Round inventory turnover ratio to 3 decimal places, eg. 12.5ss and days in inventory to 1 decimal places, e.g. 12.5.) Sorenson's inventory turnover ratio is times and its days sales in inventory is days. Question Attempts: 0 of 3 used SAVE FOR LATER SUBHIT ANSWER hudy 14 MacBook Air & de н glt option command

Answer 1

Gross profit = Gross profit margin * Total sales

Gross profit = $3,322,000 * 22.77%

Gross profit = $756,419.40

Inventory = $946,000

Inventory turnover ratio = Cost of goods sold / Average inventory

Inventory turnover ratio = (Sales - Gross profit) / Average inventory

Inventory turnover ratio = ($3,322,000 - $756,419.40) / 946,000 = $2,565,580.60 / 946,000

Inventory turnover ratio = 2.712 times

Day's sales in Inventory = 365 days / 2.712

Day's sales in Inventory = 134.6 days