The financial data for Ken’s Fresh Fruits Incorporated and Al’s Supermarket Ltd. for the current year are as follows:

Required 

a. Calculate the inventory turnover for each company. 

b. Calculate the days to sell inventory ratio for each company. 

c. Knowing the type of inventory these companies sell, comment on the reasonableness of the inventory turnover. Which company manages its inventory more efficiently?

d. Which company would be a more profitable investment? Can we tell? Explain. 

e. What are the potential problems with fast inventory turnovers? Would these be a concern for Ken’s Fresh Fruits?

Transcribed Image Text:

Ken's Fresh Fruits Al's Supermarket Annual Cost of Goods Sold $ 9,875,600 53,885,000 Inventory Jan. 1 $ 695,000 4,776,500 Inventory Dec. 31 $ 695,600 1,040,500