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    Peachey's Avatar
    Peachey Posts: 99, Reputation: 1
    Junior Member
     
    #1

    Sep 28, 2009, 01:23 PM
    Statement Calculation
    Hi I am in a little trouble, I need to calaculate the gross profit ratio, net Income and the inventory turnover ratio.

    Company 1... Company 2
    500,000... 800,000--------Sales
    350,000... 500,000--------Cost of Goods Sold
    75,000... 60,000... Inventory, Beginning of year
    25,000... 40,000... Inventory, End of year
    25,000... 10,000... Office Rent Expense

    My working Gross Profit Ratio
    150,000/500,000 = 0.3 x 100% = 30%
    300,000/800,000 = 0.375 x 100% = 37.5%

    Net Income
    Revenue:
    Sales... 500,000----------800,000
    Expense:
    Office Rent Expense... 25,000... 10,000
    Net Income---------------.=475,000... 790,000

    Inventory Turnover Ratio = This is my problem
    ArcSine's Avatar
    ArcSine Posts: 969, Reputation: 106
    Senior Member
     
    #2

    Sep 28, 2009, 01:48 PM
    Whoops, watch that Net Income calc. You've forgotten to deduct COGS.

    The Inventory TO ratio is



    Figure your Average Inventory from the given beginning-of-year and end-of-year amounts.

    Make that computation, and it'll be just.. um... peachey keen.;)
    Peachey's Avatar
    Peachey Posts: 99, Reputation: 1
    Junior Member
     
    #3

    Sep 28, 2009, 03:55 PM

    Thank you, yes I forgot the COGS in net income and in Inventory Turnover Ratio:
    Is this it or what am I doing incorrect.

    350,000 = 2.6
    75,000 + 60,000
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #4

    Sep 29, 2009, 12:14 AM

    Average inventory: Opening + Closing/2
    Company 1:
    Cogs 350,000
    Avg Inventory 50,000 (75,000+25,000)/2
    Turnover 7

    Company 2:
    500,000/50,000 = 10
    Peachey's Avatar
    Peachey Posts: 99, Reputation: 1
    Junior Member
     
    #5

    Sep 29, 2009, 05:34 AM

    Thank you again.

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