Question

Exercise 6-12 b (Essay) The following information is available for Zoe's Activewear Inc. for three recent fiscal years. 2022 2021 2020 Inventory $553,000 $568,000 $332,000 Net sales 1,948,000 1,725,000 1,311,000 Cost of goods sold 1,552,000 1,288,000 947,000 (b) Based on inventory turnover, days in inventory, and gross profit rate for 2022 and 2021, did Zoe's liquidity and profitability improve or deteriorate in 20227 Click if you would like to Show Work for this question: Open Show Work Police 1 R 2000-2019 John Wil s ons.Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc.

Answer 1

Answer. 9) Inventory Turnuver Ratio cost of goods sold Arg Inventory b) Aug Moventory - Opening mv + closing mentory c) Days in Inventory - 365 days Inventory tumorey Ratio. OR d) Inventory Turnover Ralion cost of goods Goods Ending Inventory. In the problem we are going to use formula 61 ) in considering given hints en Question, 1. Inventory Tumprey Ratio for aoaa 2011 adap 1,550,000 1,288,0DO 947, 00 O 332,000 553,000 568, 2.80 2.26 2.85 2. Days on 2oaa Inventory. 2011 For adao 365 365 365 2,26 => 28 2.85 130 days 161 days 128 days:

e. Gross pro fit Rate > Grosse pro fitxioo, cogs Gross profit > Net sales - cost of good e sold. Gross profit for 2020 7 1,948,000 (1,552,000) 396,000 apal 1,795,000 1,288,000 437,000 a0a0 1,311,000 (9477000) 364,000 - Grossprofit f. араа 2021 ао ар- 396,000 1,552000 437,000 1,288,000 364,000 94.7,000 X 25.5% 334 386.

Based on the Inventory furnbrer & Days On Inventory. a) L' quidity has 9mproved in 2012 when compared to deal, but at detoriated when compared to 2020. But In overall Joe's Liquidity has been improved compared to recent years. Based on the cross profit eo 6 Joe's profit has been drastically decreared from 2000 to 20aa. Joer profitability detoriated compared to Recent years aoat and 2020.