Evaluating the ability to sell merchandise and collect receivables

Question 1

What’s the computation for Inventory Turnover?

Answer 1

Cost of goods sold/Average merchandise inventory

Question 2

Whats the computation for Days’ sales in inventory?

Answer 2

365/inventory turnover

Question 3

What’s the computation for gross profit percentage?

Answer 3

gross profit/net sales revenue

Question 4

What’s the computation for Accounts receivables Turnover Ratio?

Answer 4

Net credit sales/Average net accounts receivable

Question 5

What’s the computation for Days’ sales in receivables?

Answer 5

365/Accounts receivables turnover ratio.