Selected financial data for Quick Sell Inc a retail store ap

Selected financial data for Quick Sell, Inc., a retail store, appear as follows.

Can someone please help me with this, I am not able to figure it out. Thanks in advance. :)

Year 1 604,000 389,000 99,000 100,000 Year 2 Sales (all on account) $. 795,000 Cost of goods sold 450,000 109,000 150,000 Average inventory during the year Average receivables during the year a-1. Compute the gross profit percentage for both years (Round your percentage answers to the nearest whole number. i.e. 0.1234 as 12%.) a-2. Compute the inventory turnover for both years. Round your answers to 1 decimal place.) a-3. Compute the accounts receivable turnover for both years Round your answers to 1 decimal place.) b. Which of the following show a positive or negative trend? Year 2 Year 1 Gross profit percentage Inventory turnover Accounts receivable turnover times times a- times times Trend b. Gross profit rate Inventory turnover Accounts Growth in net sales receivable turnover

Solution

Soluiton a:

Solution b:

As gross profit ration increased from 36% to 43% in year 2, hence its trend is positive.

As Inventory turnover ratio is increased from 3.9 times to 4.1 times, hence its trend is positive

Accounts receivable turnover ration is decreased from 6.04 times to 5.3 times, hence its trend in negative.

Growth in Net Sales = ($795,000 - $604,000) / $604,000 = 31.62%, hence its trend is also positive.

Computation of Ratios
Particulars	Calculation Year 2	Results Year 2	Calculation Year 1	Results Year 1
Sales		$795,000.00		$604,000.00
Cost of Goods Sold		$450,000.00		$389,000.00
Gross Profit (Sales - COGS)		$345,000.00		$215,000.00
a-1 : Gross Profit Percentage (Gross Profit / Sales * 100)	345000/795000*100	43%	215000/604000*100	36%
COGS		$450,000.00		$389,000.00
Average Inventory		$109,000.00		$99,000.00
a-2 : Inventory Turnover (COGS / Average Inventory)	450000/109000	4.1 Times	389000/99000	3.9 Times
Sales		$795,000.00		$604,000.00
Average Receivables		$150,000.00		$100,000.00
a-3 : account receivables Turnover (Sales / Average Accounts Receivables)	795000/150000	5.3 Times	604000/99000	6.04 Times