New Hope reported the following income statement for the year ended December 31, 2025: (Click the icon to view the income statement.) Requirements 1. Compute New Hope's inventory turnover rate for the year. (Round to two decimal places.) 2. Compute New Hope's days' sales in inventory for the year. (Round to two decimal places.)
New Hope reported the following income statement for the year ended December 31, 2025: (Click the icon to view the income statement.) Requirements 1. Compute New Hope's inventory turnover rate for the year. (Round to two decimal places.) 2. Compute New Hope's days' sales in inventory for the year. (Round to two decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Two similar questions, I am aware of bartleby's policy thats why i only attached two vry simple and similar questions, if you still deicde to only solve one, atleast please show your work so i can complete the other problem on my own.
Or solve both problems
Transcribed Image Text:### Income Statement Analysis for New Hope
**New Hope Income Statement for the Year Ended December 31, 2025:**
- **Net Sales Revenue:** $148,000
**Cost of Goods Sold (COGS):**
- Beginning Merchandise Inventory: $8,400
- Plus: Net Cost of Inventory Purchased: $76,000
- Cost of Goods Available for Sale: $84,400
- Less: Ending Merchandise Inventory: $13,800
- **Cost of Goods Sold:** $70,600
- **Gross Profit:** $77,400
**Expenses:**
- Operating Expenses: $52,000
- **Net Income:** $25,400
### Requirements:
1. **Compute New Hope’s Inventory Turnover Rate:**
- Formula: Inventory Turnover = COGS / Average Inventory
- Round the answer to two decimal places.
2. **Compute New Hope’s Days’ Sales in Inventory:**
- Formula: Days’ Sales in Inventory = 365 / Inventory Turnover
- Round the answer to two decimal places.
### Calculations:
- **Inventory Turnover:**
- Use the fields provided in the form to calculate this metric.
- **Days’ Sales in Inventory:**
- Use the computed Inventory Turnover to find this value.
This information provides insights into New Hope's inventory management efficiency for the fiscal year 2025. Understanding these metrics can help stakeholders make informed decisions regarding inventory and sales strategies.
![### Inventory Turnover Calculation for Broadway Communications
**Objective:** Compute the rate of inventory turnover and days' sales in inventory for Broadway Communications, based on the annual financial figures.
#### Data Provided:
- **Cost of Goods Sold:** $18,500
- **Beginning Merchandise Inventory:** $540
- **Ending Merchandise Inventory:** $400
#### Instructions:
Select appropriate labels and enter the figures to compute the inventory turnover. **Note:** Round the average inventory to one decimal place (e.g., X.X) and round the final inventory turnover result to two decimal places (e.g., X.XX).
#### Steps to Calculate Inventory Turnover:
1. **Calculate Average Inventory:**
\[
\text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2}
\]
2. **Compute Inventory Turnover:**
\[
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
\]
3. **Express the Inventory Turnover in Times:**
- Enter the average inventory and divide the Cost of Goods Sold by this value. Round this result to two decimal places to get the Inventory Turnover Ratio.
By completing these steps, you'll determine how efficiently Broadway Communications is managing its inventory, providing insights into their operational efficiency.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9f5e28c-a0d3-45b8-be0c-01cbd597802f%2Fea8e6978-e2ed-4a1f-b499-6a974457c262%2Fimerwk8_processed.png&w=3840&q=75)
Transcribed Image Text:### Inventory Turnover Calculation for Broadway Communications
**Objective:** Compute the rate of inventory turnover and days' sales in inventory for Broadway Communications, based on the annual financial figures.
#### Data Provided:
- **Cost of Goods Sold:** $18,500
- **Beginning Merchandise Inventory:** $540
- **Ending Merchandise Inventory:** $400
#### Instructions:
Select appropriate labels and enter the figures to compute the inventory turnover. **Note:** Round the average inventory to one decimal place (e.g., X.X) and round the final inventory turnover result to two decimal places (e.g., X.XX).
#### Steps to Calculate Inventory Turnover:
1. **Calculate Average Inventory:**
\[
\text{Average Inventory} = \frac{\text{Beginning Inventory} + \text{Ending Inventory}}{2}
\]
2. **Compute Inventory Turnover:**
\[
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
\]
3. **Express the Inventory Turnover in Times:**
- Enter the average inventory and divide the Cost of Goods Sold by this value. Round this result to two decimal places to get the Inventory Turnover Ratio.
By completing these steps, you'll determine how efficiently Broadway Communications is managing its inventory, providing insights into their operational efficiency.
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