Danier Leather Inc. manufactures and sells high- quality, fashionable leather clothing and accessories. The companys business is
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1. Compute the gross profit and the inventory turnover ratio for fiscal years 2011 and 2012.
2. Compute the company€™s gross profit for each quarter. What does the seasonal pattern of the gross profit reveal?
3. Is there a seasonal pattern in inventory balances? Would Danier€™s choice of fiscal year- end affect the inventory turnover ratio computed in (1)? Explain.
4. Re-compute Danier€™s inventory turnover ratios for 2012 based on the average of the quarterly balances of ending inventory instead of the annual balances. Is there a significant difference between this ratio and the ratio computed in (1)? Explain.
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...
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Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
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