The following information pertains to Naomi Campbell Company as of December 31, 2011. Assume that all sales were on credit. Accounts receivable (net) as of January 1, 2011 were $35,000 and inventory was $30,000.
Assets
Cash and short-term investments $ 40,000
Accounts receivable (net) 25,000
Inventory 20,000
Property, plant and equipment 210,000
Total Assets $295,000
Liabilities and Stockholders
Solution
Formula for inventory turnover ratio = Cost of goods sold/Average inventory
Given cost of goods sold = $45,000
Average inventory = (Opening stock+ Clsoing stock)/2
=($30,000 + $20,000)/2
= $50,000/2
=$25,000
Substituting the values in the formula
=$45,000/$25,000
=1.8 times.
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The following information pertains to Naomi Campbell Company as of Dec.docx
1. The following information pertains to Naomi Campbell Company as of December 31, 2011.
Assume that all sales were on credit. Accounts receivable (net) as of January 1, 2011 were
$35,000 and inventory was $30,000.
Assets
Cash and short-term investments $ 40,000
Accounts receivable (net) 25,000
Inventory 20,000
Property, plant and equipment 210,000
Total Assets $295,000
Liabilities and Stockholders
Solution
Formula for inventory turnover ratio = Cost of goods sold/Average inventory
Given cost of goods sold = $45,000
Average inventory = (Opening stock+ Clsoing stock)/2
=($30,000 + $20,000)/2
= $50,000/2
=$25,000
Substituting the values in the formula
=$45,000/$25,000
