Old Mills's income statement appears as follows (amounts in thousands): Use the following ratio data to complete
Question:
Use the following ratio data to complete Old Mills's income statement:
1. Inventory turnover is 3.70 (beginning Merchandise Inventory was $810; ending Merchandise Inventory was $770).
2. Profit margin ratio is 14%.
OLD MILLS Income Statement Year Ended December 31, 2018 $ 6,900 Net Sales Revenue (a) Cost of Goods Sold Selling and Administrative Expenses 1,710 (b) Interest Expense Other Expenses 120 Income Before Income Taxes 1,150 (c) Income Tax Expense (d) Net Income
Step by Step Answer:
OLD MILLS Income Statement Year Ended December 31 2018 ...View the full answer
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
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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