Stream Ltd. reported total inventory on January 1 and December 31, 2011, of $180,000 and $150,000, respectively.

Question:

Stream Ltd. reported total inventory on January 1 and December 31, 2011, of $180,000 and $150,000, respectively. The cost of goods sold for 2011 was $1,240,000. Stream's nearest competitor reported inventories of $410,000 and $460,000 on January 1 and December 31, 2011, respectively, and reported a cost of goods sold of $2,270,000 for 2008. Total 2011 sales revenues for Stream Ltd. and its competitor were $1,610,000 and $3,365,000, respectively.
Required:
a. Calculate the s for the two companies for 2011.
b. Calculate the gross margin percentage (gross margin divided by sales) for the two companies for 2011.
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 percentage, which company is earning a higher profit margin?
e. Which company would you recommend as being better managed? Indicate why. 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,...