Snow Pack Corporation is the biggest snowmobile manufacturer in the world. It reported the following amounts in its financial statements (in millions): 20172018Net Sales Revenue$ 4,900$ 4,360Cost of Goods Sold4,2903,810Average Inventory490440 Required:1-a. Calculate the inventory turnover ratio for 2018 and 2017.1-b. Calculate the average days to sell inventory for 2018 and 2017.2. Did inventory turnover at Snow Pack improve or decline in 2018?3. Calculate the 2018 gross profit percentage.4. The main competitor for Snow Pack is Arctic Cat. Prior to being acquired by Textron, Incorporated, Arctic Cat reported its inventory turnover was 4.6 and its gross profit percentage was 5.2 percent. Why was Arctic Cat more likely than Snow Pack to require a write-down for LCM/NRV?

Ratio analysis is used to evaluate the companies financial situation and compare the current…

Answered: Snow Pack Corporation is the biggest…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 58E: Analyzing Inventory The recent financial statements of McLelland Clothing Inc. include the following...

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Snow Pack Corporation is the biggest snowmobile manufacturer in the world. It reported the following amounts in its financial statements (in millions):

	2017	2018
Net Sales Revenue	$ 4,900	$ 4,360
Cost of Goods Sold	4,290	3,810
Average Inventory	490	440

Required:

1-a. Calculate the inventory turnover ratio for 2018 and 2017.
1-b. Calculate the average days to sell inventory for 2018 and 2017.
2. Did inventory turnover at Snow Pack improve or decline in 2018?
3. Calculate the 2018 gross profit percentage.
4. The main competitor for Snow Pack is Arctic Cat. Prior to being acquired by Textron, Incorporated, Arctic Cat reported its inventory turnover was 4.6 and its gross profit percentage was 5.2 percent. Why was Arctic Cat more likely than Snow Pack to require a write-down for LCM/NRV?

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