Problem 6-8A (Algo) Use the inventory turnover ratio and gross profit ratio to analyze companies (LO6-7) Wawa Food Markets is a convenience store chain located primarily in the Northeast. The company sells gas, candy bars, drinks, and other grocery-related items. St. Jude Medical Incorporated sells medical devices related to cardiovascular needs. Suppose a local Wawa Food Market and St. Jude sales office report the following amounts in the same year (company names are disguised): Company 1 Company 2 Net sales $340,000 $340,000 Cost of goods sold 126,000 276,000 Gross profit $214,000 $64,000 Average inventory $34,000 $24,000 Required: 1. For Company 1 and Company 2, calculate the inventory turnover ratio.2. For Company 1 and Company 2, calculate the gross profit ratio.3. After comparing the inventory turnover ratios and gross profit ratios, which company do you think is Wawa?
Problem 6-8A (Algo) Use the inventory turnover ratio and gross profit ratio to analyze companies (LO6-7) Wawa Food Markets is a convenience store chain located primarily in the Northeast. The company sells gas, candy bars, drinks, and other grocery-related items. St. Jude Medical Incorporated sells medical devices related to cardiovascular needs. Suppose a local Wawa Food Market and St. Jude sales office report the following amounts in the same year (company names are disguised): Company 1 Company 2 Net sales $340,000 $340,000 Cost of goods sold 126,000 276,000 Gross profit $214,000 $64,000 Average inventory $34,000 $24,000 Required: 1. For Company 1 and Company 2, calculate the inventory turnover ratio.2. For Company 1 and Company 2, calculate the gross profit ratio.3. After comparing the inventory turnover ratios and gross profit ratios, which company do you think is Wawa?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Problem 6-8A (Algo) Use the inventory turnover ratio and gross profit ratio to analyze companies (LO6-7)
Wawa Food Markets is a convenience store chain located primarily in the Northeast. The company sells gas, candy bars, drinks, and other grocery-related items. St. Jude Medical Incorporated sells medical devices related to cardiovascular needs. Suppose a local Wawa Food Market and St. Jude sales office report the following amounts in the same year (company names are disguised):
| Company 1 | Company 2 | |
|---|---|---|
| Net sales | $340,000 | $340,000 |
| Cost of goods sold | 126,000 | 276,000 |
| Gross profit | $214,000 | $64,000 |
| Average inventory | $34,000 | $24,000 |
Required:
1. For Company 1 and Company 2, calculate the inventory turnover ratio.
2. For Company 1 and Company 2, calculate the gross profit ratio.
3. After comparing the inventory turnover ratios and gross profit ratios, which company do you think is Wawa?
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education