Inventory Turnover The following financial data is from Hi-Tech Instruments\' fi

Question

Inventory Turnover The following financial data is from Hi-Tech Instruments' financial statements (thousands of dollars, except earnings per share) Sales revenue $210,000 Cost of goods sold 132.000 Net incoma 2,600 Earnings per share 415 of Dellars) Dec. 31, 2016 Dec. 31, 2015 18.300 $18.000 41,000 | 6 500 10.800 109 700 52,600 000 Tocal curnent Plant assecs (nec Other aepec otl Labilices and Scockholiders Equity Notes payable-banka ccounts paabe Accrued abilinies 13,800 5.000.000 8.700 Total rent lablses 45.700 5 6 7 8 9

Explanation / Answer

Part 1

Inventory turnover ratio = cost of goods sold / Average inventory = cost of goods / ((beginning inventory + ending inventory) /2)=132000/((50700+46500)/2) =132000/48600 = 2.7 times

Part 2

Hi-Tech Instrument's ratio is lower than the industry average

(inventory turnover ratio of industry is 3.5 times whereas hi-tech instrument's inventory turnover ratio is 2.7 times).

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.