Problem

Ratios for a Retail StoreSelected financial data for SellFast, Inc., a retail store, appea...

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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