Margaret Company reported the following information for the current year: Industry Averages available are:
How do the inventory turnover and gross profit percentage for Margaret Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places.Round gross profit percentage to the nearest percent. )

Question

Margaret Company reported the following information for the current year:  Industry Averages available are:
 How do the inventory turnover and gross profit percentage for Margaret Company compare to the industry averages for the same ratios? (Round inventory turnover to two decimal places.Round gross profit percentage to the nearest percent. )

Quizplus · Accepted Answer

Average inventory = ($245,000 + $115,000)÷ 2 = $180,000
Cost of Goods Sold = 65% × $3,000,000 = $1,950,000
Inventory turnover = $1,950,000 ÷ $180,000 = 10.83
Gross Profit = 35% × $3,000,000 = $1,050,000
Gross Profit Percentage = $1,050,000 ÷ $3,000,000 = 35%
Margaret's ratios for inventory turnover and gross profit percentage exceed industry averages.

Margaret Company Reported the Following Information for the Current Year