Question

Simon Company’s year-end balance sheets follow.

At December 31	2017			2016			2015
Assets
Cash	$	33,443		$	39,092		$	41,136
Accounts receivable, net		89,200			62,600			55,400
Merchandise inventory		115,000			85,000			56,000
Prepaid expenses		10,770			10,262			4,571
Plant assets, net		329,991			301,670			266,893
Total assets	$	578,404		$	498,624		$	424,000
Liabilities and Equity
Accounts payable	$	141,142		$	82,582		$	54,849
Long-term notes payable secured by mortgages on plant assets		106,565			112,390			91,830
Common stock, $10 par value		162,500			162,500			162,500
Retained earnings		168,197			141,152			114,821
Total liabilities and equity	$	578,404		$	498,624		$	424,000

The company’s income statements for the years ended December 31, 2017 and 2016, follow. Assume that all sales are on credit:

For Year Ended December 31	2017						2016
Sales				$	751,925					$	593,363
Cost of goods sold	$	458,674					$	385,686
Other operating expenses		233,097						150,121
Interest expense		12,783						13,647
Income taxes		9,775						8,900
Total costs and expenses					714,329						558,354
Net income				$	37,596					$	35,009
Earnings per share				$	2.31					$	2.15

(3) Compute inventory turnover

Answer 1

Inventory Turnoves - Cost of Goods sold Aug inventory for year-2017 Average coventory 115000 85000 2 - 100 000 458674 Joventory Turnoves - 100 000 Inventory Turnoves = 4.59 times' four year 2016 Average Lovestory: 85000+ 56000 = 705000 Inventory Turnoves a 385686 70500 Inventory Turnover = 5.47.