Problem

Calculating gross profit percentage and inventory turnover to evaluate a business [10 min]...

Calculating gross profit percentage and inventory turnover to evaluate a business [10 min]

LanWan Software, Inc., earned sales revenue of $65,000,000 in 2012. Cost of goods sold was $39,000,000, and net income reached $9,000,000, the company’s highest ever. Total current assets included inventory of $3,000,000 at December 31, 2012. Inventory was $5,000,000 on December 31, 2011.

Requirement

1. Compute the company’s gross profit percentage and rate of inventory turnover for 2012.

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