Homework Answers
Answer
| a-1) Calculation of gross profit percentage: |
| Gross profit percentage= gross profit/sales*100 |
| Year 1 |
| Gross profit= sales- cost of goods sold |
| Gross profit= 603000-395000= $ 208,000 |
| Gross profit percentage= 208000/603000*100= 34% |
| Year 2 |
| Gross profit= 788000-450000= $ 338,000 |
| Gross profit percentage= $338,000/$788,000*100= 43% |
| a-2)Calculation of Inventory turnover: |
| inventory turnover= cost of goods sold/ Average account inventory |
| Year 1 |
| inventory turnover= $395000/134000= $ 2.95 |
| Year 2 |
| inventory turnover= $450000/$144000= $ 3.13 |
| a-3)Calculation of Receivables turnover: |
| Receivables turnover= Net sales/ Average account receivables |
| Year 1 |
| Receivables turnover= $ 603000/100000= $ 6.03 |
| Year 2 |
| Receivables turnover= $788,000/$150000= $5.25 |
| b) Gross profit percentage and inventory turnover shows a positive trend. |
| Receivable turnover show negative trend. |
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Please help with figuring the Inventory Turnover. I'm
not sure what I'm doing wrong.
Thank you!
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