Suppose a company you are considering as an investment made sales of $54.8 billion in the year ended December 31, 2017. Collections from customers totaled $55 billion. The company began the year with $6.6 billion in inventories and ended with $7.9 billion. During the year, purchases of inventory added up to $39.8 billion. Of the purchases, the company paid $37.9 billion to suppliers.
As an investor searching for a good investment, you would identify several critical pieces of information about the company's operations during the year.
Compute the company's gross profit, gross profit percentage, and rate of inventory turnover during 2017. Use the cost-of-goods-sold example as shown in Exhibit 5-4, Panel B as needed. Would the information help you make your investment decision?