Question

The following financial information is for Alpha Corporation are for the fiscal years ending 2017 & 2016 (all balances are normal):

Item/Account	2017	2016
Accounts Receivable	$9800	$9400
Inventory	$30000	$16000
Net Sales (all credit)	$85000	$71000
Cost of Goods Sold	$62000	$52000
Net Income	$7200	$6900

Use this information to determine for FY 2017: (Round & enter your answers to one decimal place and enter the value.)

1. the inventory turnover ratio

2. number of days of inventory

3. Gross Profit Margin

4. Profit Margin

Answer 1

Inventory Turnover ratio = Cost of Goods Sold / Average inventory = 62000 / [(30,000+16,000)/2] = 2.70 (rounded)
Days in inventory = 365/ Inventory Turnover = 365/2.70 = 135.2 days
Gross profit margin = (Sales - Cost of Goods Sold) / sales = (85,000-62,000)/85,000 = 27.1%
Profit Margin = Net income / sales = 7200/85000 = 8.5%

I have rounded some numbers.

Please comment if you face any issues