The following information was taken from the accounting records of Indigo Ltd. and Cullumber Ltd. at October 31, 2024. The two companies are competitors. Indigo Ltd. Cullumber Ltd. Ending inventory, Oct. 31, 2023 $384,000 $148,000 Ending inventory, Oct. 31, 2024 307,000 477,000 Cost of goods sold, 2024 6,219,000 4,968,750 Sales for 2024 8,292,000 8,281,250 G (a) Calculate the gross margin, gross margin ratio, and inventory turnover ratio at October 31, 2024, for: i. Indigo Ltd. ii. Cullumber Ltd. (Round gross margin ratio and inventory turnover ratio to 1 decimal place, e.g. 15.2% or 10.1.)

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.