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Analysis of Inventory Eldermon Sales Company

Income statements for Eldermon Sales Company follow. Analyze the inventory position at the end of
each year as well as the profitability of inventory sales in each year. What conclusions would you make
concerning the inventory trend?
2015 2014 2013
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000 $100,000 $75,000
Cost of goods sold:
Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000 $ 25,000 $ 5,000
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000 80,000 85,000
$135,000 $105,000 $90,000
Ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 30,000 25,000
$ 90,000 $ 75,000 $65,000
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 35,000 $ 25,000 $10,000

Solution Summary

The answer is provided in an excel file which shows the calculations - cell references are used. The ratios are followed by a written comment as to the analysis of the trend of inventory

$2.19