Perez Corporation has the following financial data for the years 20X1 and 20X2: Sales Cost of goods sold Inventory 20X1 20X2 20x1 $ 5,221,000 3,632,000 454,000 a. Compute the inventory turnover for each year using the formula Sales/Inventory. Note: Round your answers to 1 decimal place. Inventory Turnover Ratio times times 20X2 $ 6,578,000 4,862,000 572,000
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Inventory turnover ratio
The ratio that represents the number of units sold and replaced by a business during a particular fiscal year is called the inventory turnover ratio. It is always better to keep an inventory turnover ratio between 5 times to 10 times. A high inventory turnover rate indicates that assets are being sold quickly.
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