Explore BrainMass

Explore BrainMass

    Inventory, turnover ratio and gross profit ratio

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Using the following information, calculate inventory turnover ratio, the average days in inventory and the gross profit ratio for Howard Company for the year ended December 31, 2011 (Rounded to two decimal places.) Explain each concept and show the relevant formula along with the solution.

    Sales $225,000

    Cost of goods sold $175,000

    Ending Inventory, December 31, 2011 $15,275

    Ending Inventory December 31, 2010 $18,750

    Net Income $36,500

    © BrainMass Inc. brainmass.com October 10, 2019, 5:51 am ad1c9bdddf

    Solution Preview

    Inventory turnover ratio - This ratio shows how many times a company's inventory is sold and replaced over a specific period of time and is calculated using the following ...

    Solution Summary

    This solution contains a step-by-step explanation for how to calculate inventory, turnover ratio and gross profit ratio for the Howard Company, given their figures for sales, cost of goods sold, ending inventory for 2010 and 2011, and net income.