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2 years ago

Selected financial data for Quick Sell, Inc., a retail store, appear as follows.

Business

1 answer:

blagie [28]2 years ago

8 0

Answer:

a-1

Year 2 34%

Year 1 33%

a-2

Year 2 4.5

Year 1 4.0

a-3

Year 2 5.0

Year 1 6.1

b. Year 2

Explanation:

a-1. Computation for the gross profit percentage for both years using this formula

Gross profit percentage = Gross profit / Sales

Let plug in the formula

Year 2 =( $ 750,000-495,000)/$ 750,000 = 34%

Year 1 = ($ 610,000-$408,000)/$ 610,000 = 33%

a-2. Computation for the inventory turnover for both years using this formula

Inventory turnover = Cost of goods sold / Average inventory during the year

Let plug in the formula

Year 2 = 495,000 /110,000 = 4.5

Year 1 = 408,000/102,000= 4.0

a-3. Computation for the accounts receivable turnover for both years using this formula

Accounts receivable turnover = Sales (on account) / Average receivables during the year

Let plug in the formula

Year 2 = $ 750,000 /150,000 = 5.0

Year 1 = $ 610,000 /100,000 = 6.1

b. Based on the above calculation Year 2 show a positive trend.

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