Corona Company\'s balance sheet accounts follow: At December 31 2014 2013 2012 A
ID: 2465023 • Letter: C
Question
Corona Company's balance sheet accounts follow:
At December 31
2014
2013
2012
Assets
Cash
$46,878
$52,183
$52,212
Accounts receivable, net
99,044
75,015
62,182
Merchandise inventory
116,130
94,511
67,125
Prepaid expenses
29,340
29,119
24,459
Plant assets, net
262,864
239,952
220,572
Total assets
$554,256
$490,780
$426,550
Liabilities and Equity
Accounts payable
$140,078
$99,155
$73,889
Long-term notes payable secured by mortgages on plant assets
117,811
119,839
102,069
Common stock, $10 par value
172,500
172,500
172,500
Retained earnings
123,867
99,286
78,092
Total liabilities and equity
$554,256
$490,780
$426,550
What is Corona Company's inventory turnover ratio for 2014, assuming net sales and gross profit for the period were $1,484,153, $1,030,337 respectively?
5.79
4.31
10.90
4.80
5.09
Corona Company's balance sheet accounts follow:
Explanation / Answer
Hence option 2 is correct
Inventory turnover ratio = Cost of goods sold / Average inventory For 2014 Cost of goods sold = Net Sales - Gross profit = 1484153 - 1030337 = 453816 Avergae inventory = (opening inventory + closing inventory) / 2 = ( 94511 + 116130) / 2 = 105320.5 Inventory turnover ratio = 453816 / 105320.5 = 4.31