Adjusted Big Blast Fireworks Trial Balance January 31, 2021 Account Title Credit Cash Debit 111,900 53,370 3,300 84,100 Accounts Receivable Allowance for Uncollectible Accounts Land Accounts Payable Interest Payable Income Taxes Payable Notes Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Salaries Expense Bad Debt Expense Interest Expense Income Tax Expense Total 59,600 300 13,800 45,000 71,000 51,000 675,000 516,900 134,000 4,630 300 13,800 919,000 $ 919,000 Big Blast Fireworks Multiple-Step Income Statement For the year ended January 31, 2021 *$ 675,000 Sales Revenue $ 675,000 Gross Profit Salaries Expense Bad Debt Expense Interest Expense Total Operating Expenses Operating Income 134,000 4,630 300 138,930 536,070 Income Before Taxes 536,070 $ 536,070 Adjusted Big Blast Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: $ 0 Total Current Liabilities 0 01 0 01 Total Liabilities Total Current Assets Long-term Assets: Stockholders' Equity Total Stockholders' Equity 0 Total Liabilities & Stockholders' Equity Total Assets Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory turnover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 14 times, is the company managing its inventory more or less efficiently than other companies in the same industry? The inventory turnover ratio is: times The company managing its inventory more efficiently. (True or False) (b) Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 29%, is the company more or less profitable per dollar of sales than other companies in the same industry? The gross profit ratio is: Is the company more or less profitable per dollar of sales? (c) Used together, what might the inventory turnover ratio and gross profit ratio suggest about Big Blast Fireworks' business strategy? Is the company's strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items? Based on the inventory turnover ratio and the gross profit ratio, Big Blast Fireworks' business strategy appears to be selling a