BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
1 views

Inventory Analysis

Singleton Inc. reported the following information for the current year:

Chapter 6, Problem 27CE, Inventory Analysis Singleton Inc. reported the following information for the current year: Required:

Required:

Compute Singleton’s (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Note: Round all answers to two decimal places.)

To determine

Concept introduction:

Gross Profit ratio:

Gross profit ratio is calculated by dividing the gross profit by sales. The formula to calculate the gross profit ration is as follows:

Gross Profit = Gross ProfitSales 

Inventory Turnover Ratio:

Inventory Turnover Ratio measures the efficiency of the company in converting its inventory into sales. It is calculated by dividing the Cost of goods sold by Average inventory. The formula of the Inventory Turnover Ratio is as follows:

Inventory Turnover Ratio=Cost of goods soldAverage inventory

Note: Average inventory is calculated with the help of following formula:

Average inventory=(Beginning inventory + Ending inventory)2

To calculate:

The Gross Profit Ratio, Inventory Turnover ratio, and Average days to sell inventory.

Explanation

The Gross Profit Ratio, Inventory Turnover ratio, and Average days to sell inventory are calculated as follows:

Gross Profit (A) $ 155,000
Sales (B) $ 650,000
Gross Profit Ratio (A/B) 23.85%
Cost of Goods Sold (C) $ 495,000

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How would you model Question 6 with an OODM? (Use Figure 2.4 as your guide.)

Database Systems: Design, Implementation, & Management

Collect information on the Surface Water Treatment Rule (SWTR) standards set by the EPA. Write a brief memo to ...

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

Case Study Amateur Sports League You are the new manager for a nonprofit amateur soccer league. The league need...

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)