A skeleton of Katheys Florals income statement appears as follows (amounts in thousands): Income Statement Net sales
Question:
A skeleton of Kathey’s Florals’ income statement appears as follows (amounts in thousands):
Income Statement
Net sales .................$ 7,300
Cost of goods sold ............. (a)
Selling expenses .............. 1,502
Administrative expenses .......... 1,300
Interest expense .............. (b)
Other expenses ............... 156
Income before taxes ............ 1,038
Income tax expense ............ (c)
Net income ................ $ (d)
Use the following ratio data to complete Kathey’s Florals’ income statement:
a. Inventory turnover was 3 (beginning inventory was $800; ending inventory was $772).
b. Rate of return on sales (after income taxes) is 0.08.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Income Statement Thousands Net sales 7300 Cost of goods sold 2 358 a ...View the full answer
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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