Truman Co.sells a large number of common household items,while Stapleton sells a small number of expensive items.The two companies report the same dollar amount for ending inventory and gross profit for the year.Which of the following is most likely true?

Question

Quizplus · Accepted Answer

Since Truman sells a large number of common household items, they are likely to have a higher inventory turnover ratio as compared to Stapleton, which sells expensive items. However, since both companies report the same dollar amount for ending inventory and gross profit for the year, it means that Stapleton has a higher gross profit ratio. Thus, Option B is the most likely scenario.

Truman CoSells a Large Number of Common Household Items,while Stapleton Sells