Question

The following information is available for Bramble Corp. for three recent fiscal years.

		2022		2021		2020
Inventory		$530,000		$562,000		$330,000
Net sales		1,885,000		1,784,000		1,315,000
Cost of goods sold		1,583,400		1,338,000		955,000

(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		enter an inventory turnover	times		enter an inventory turnover	times
Days in Inventory		enter a number of days	days		enter a number of days	days
Gross Profit Rate		enter percentages	%		enter percentages	%

Answer 1

Inventory Turnover = Cost of goods sold / Average inventory

2022 = ($1,583,400 / $546,000)

= 2.90 times

Average inventory = ($562,000 + $530,000) / 2 = $546,000

2021 = ($1,338,000 / $446,000)

= 3 times

Average inventory = ($330,000 + $562,000) / 2 = $446,000

Days in Inventory = 365 / Inventory turnover

2022 = 365 / 2.90 times

= 126 days

2021 = 365 / 3 times

= 122 days

Gross profit rate = (Revenue - Cost of goods sold) / Revenue

2022 = ($1,885,000 - $1,583,400) / $1,885,000

= 16%

2021 = ($1,784,000 - $1,338,000) / $1,784,000

= 25%