Question

Real World Financials The table below contains selected information from recent financial statements of Green and White, two companies in the home improvement retail industry (S in millions): Net sales Coat of goods sold Year-end inventory Green 1/28/2018 1/29/2017 $ 101, 104 $94.795 66,748 62,482 12,948 12,749 White 2/2/2018 2/3/2017 $ 68,819 $ 65,217 45,410 42,753 11,593 10,658 Required: Calculate the gross profit ratio, the inventory turnover ratio, and the average days in inventory for the two companies for their fiscal years ending in 2018. (Use 365 days a year. Round "Inventory turnover ratio" to 2 decimal places. Enter dollar amounts in millions rounded to the nearest whole number.) = Choose Numerator: Gross profit 34,3561 23,406 X Gross Profit Ratio Choose Denominator: Net sales 101,104 68,819 Gross Profit Ratio Gross profit ratio 33.98 34.01 Green White = = % % = Inventory Turnover Ratio Choose Numerator: Choose Denominator Cost of goods sold 1 Average inventory 66,7481 12,849 45,4101 11,128 Inventory Turnover Ratio Inventory turnover ratio 5.19 4.08 Green White = = times times = Choose Numerator: Total number of days 365 365 Average Days in Inventory Choose Denominator: Inventory turnover ratio 5.19 X 4.08 Inventory Average days in inventory 70 89 Green White = = days days *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

Answer 1

Gross profit ratio = (net sales-cost of goods sold)/net sales

Inventory turnover ratio = cost of goods sold / average inventory = cost of goods sold / ((beginning inventory+ending inventory)/2)

Average days in inventory = 365/Inventory Turnover ratio

H	I	J	K
8		Green
9		1/28/2018	1/29/2017
10	Net Sales	101,104
11	Cost of Goods Sold	66,748
12	Year-end Inventory	12,948
13	Gross Profit Ratio = (101104-66748)/101104	33.98%
14
15	Inventory	12948	12749
16	Average Inventory = (12948+12749)/2	12848.50	or 12849
17	Inventory turnover ratio =66748/(12948+12749)/2	5.19	times
18
19	number of Days	365
20	Average days in inventory	70.26	days
21
22
23		White
24
25		02/02/2018	02/03/2017
26	Net Sales	68,819
27	Cost of Goods Sold	45,410
28	Year-end Inventory	11,593
29	Gross Profit Ratio = (68819-45410)/68819	34.02%
30
31	Inventory	11593	10658
32	Average Inventory = (11593+10658)/2	11125.50
33	Inventory turnover ratio =66748/(12948+12749)/2	4.08	times
34
35	number of Days	365
36	Average days in inventory	89.43	days
37		or 89	days