The following information pertains to two competitors, Superior Inc. and Michigan Corp. Superior Inc. reported sales revenues

Question:

The following information pertains to two competitors, Superior Inc. and Michigan Corp.

Superior Inc. reported sales revenues of $1,610,000 and Michigan Corp. reported sales revenue of $3,365,000.
Required:
a. Calculate the inventory turnover ratio for Superior and Michigan.
b. Calculate the gross margin and gross margin ratio for Superior and Michigan.
c. On the basis of inventory turnover, which company is moving its inventory faster? Does that mean the inventory is better managed? Explain.
d. On the basis of gross margin ratio, which company is earning a higher profit margin?
e. Which company do you think is better managed? Explain your answer.

Inventory Turnover Ratio
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,...