Question

The following information is available for Splish Brothers Inc. for three recent fiscal years. 2022 2021...

The following information is available for Splish Brothers Inc. for three recent fiscal years.

2022

2021

2020

Inventory

$580,000 $590,000 $320,000

Net sales

1,950,000 1,750,000 1,350,000

Cost of goods sold

1,462,500 1,228,500 938,000


(a)

Calculate the inventory turnover, days in inventory, and gross profit rate for 2022 and 2021. (Round inventory turnover to 1 decimal place, e.g. 5.2, days in inventory to 0 decimal places, e.g. 125 and gross profit rate to 1 decimal place, e.g. 5.2%.)

2022 2021

Inventory Turnover

   times times

Days in Inventory

days days

Gross Profit Rate

% %

Homework Answers

Answer #1
a
2022 2021
Inventory Turnover 2.5 times 2.7 times
Days in Inventory 146 days 135 days
Gross Profit Rate 25.0% 29.8%
Workings:
2022 2021
Cost of goods sold 1462500 1228500
Divide by Average inventory 585000 455000
Inventory Turnover 2.5 2.7
2022 2021
Days in a year 365 365
Divide by Inventory Turnover 2.5 2.7
Days in Inventory 146 135
2022 2021
Net sales 1950000 1750000
Less: Cost of goods sold 1462500 1228500
Gross Profit 487500 521500
Gross Profit rate 25.0% 29.8%
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