Good afternoon,How would I figure out the inventory turnover with the infomation given? Toulouse Co. Lautrec Co.AssetsCash $117,000 $309,000 Receivables 229,000 290,000 Inventories 593,000 544,000 Total current assets 939,000 1,143,000 Other assets 490,000 587,000 Total assets $1,429,000 $1,730,000 Liabilities and Stockholders’ EquityCurrent liabilities $296,000 $342,000 Long-term liabilities 382,000 490,000 Capital stock and retained earnings 751,000 898,000 Total liabilities and stockholders’ equity $1,429,000 $1,730,000 Annual sales $968,000 $1,565,000 Rate of gross profit on sales 30% 40%

Ratio analysis is a method of measuring the financial position of the organization with different kinds of ratios such as current ratio, liquid ratio, profitability ratio, solvency ratio. Inventory turnover ratio = Cost of goods sold / inventory For Toulouse co. Inventories = 593,000 Cost of goods sold = Sales * ( 1 - Gross profit rate ) = 968,000 * ( 1 - 0.30) = 677,600 Inventory turnover ratio = 677,600 / 593,000 = 1.143 For Lautrec Co. Inventories = 544,000 Cost of goods sold = Sales * ( 1 - Gross profit rate ) = 1,565,000 * ( 1 - 0.40) = 939,000 Inventory turnover ratio = 939,000 / 544,000 = 1.726 The correct answer is For Toulouse co. = 1.143 times For Lautrec Co. = 1.726 times

Answered: Good afternoon, How would I figure out…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Good afternoon,

How would I figure out the inventory turnover with the infomation given?

Assets
	Toulouse Co.		Lautrec Co.
Cash	$117,000			$309,000
Receivables	229,000			290,000
Inventories	593,000			544,000
Total current assets	939,000			1,143,000
Other assets	490,000			587,000
Total assets	$1,429,000			$1,730,000

Liabilities and Stockholders’ Equity
Current liabilities	$296,000			$342,000
Long-term liabilities	382,000			490,000
Capital stock and retained earnings	751,000			898,000
Total liabilities and stockholders’ equity	$1,429,000			$1,730,000
Annual sales	$968,000			$1,565,000
Rate of gross profit on sales	30	%		40	%

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