Use the following information: $ 215,000 152,000 Net sales Cost of goods sold Be

Question

Use the following information: $ 215,000 152,000 Net sales Cost of goods sold Beginning inventory Ending inventory 38,000 a. Calculate the inventory turnover ratio. (Round your answer to 1 decimal place.) Inventory turnover ratio times b. Calculate the average days in inventory. (Assume 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) verage days in inventory c. Calculate the gross profit ratio. (Round your answer to 2 decimal place.) ross profit ratio

Explanation / Answer

a. Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

= $ 152,000 / [ ( $ 48,000 + $ 38,000 ) /2]

= 3.534883721

= 3.5 times

Hence the correct answer is 3.5 times

b. Average Days in Inventory = Number of Days in a Year/ Inventory Turnover Ratio

= 365 / 3.534883721

= 103.2565789

= 103.3

Hence, the correct answer is 103.3 days

c. Gross Profit = Net Sales - Cost of Goods Sold

= $ 215,000 - $ 152,000

= $ 63,000

Gross Profit Ratio = Gross Profit / Net Sales *100

= $ 63,000 / $ 215,000 * 100

= 29.30232558%

= 29.30%

Hence, the correct answer is 29.30%

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