Ratios for a Retail Store
Selected financial data for SellFast, Inc., a retail store, appear as follows:
| 2011 | 2010 |
Sales (all on account) | $750,000 | $610,000 |
Cost of goods sold | 495,000 | 408,000 |
Average inventory during the year | 110,000 | 102,000 |
Average receivables during the year | 150,000 | 100,000 |
a. Compute the following for both years:
1. Gross profit percentage
2. Inventory turnover
3. Accounts receivable turnover
b. Comment on favorable and unfavorable trends.
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