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Cummings Corporation has just completed its comparative statements for the year ended December 31, 2020. For the corporation to decide on whether to add new
Cummings Corporation has just completed its comparative statements for the year ended December 31, 2020. For the corporation to decide on whether to add new product lines or to discontinue some products, some analysis of the corporation financial position has to be undertaken. The financial statement for 2020 and 2019 are as follows: Cummings Corporation Income Statement Years ended 2020 and 2019 2020 2019. Sales revenue $450.000 $420,000 Cost of goods sold 250.000 230.000 Gross margin 200.000 190.000 Operating expenses 167.000 168.000 Pretax income 33.000 22.000 Income tax 10.000 6.000 Net income $23.000 $16.000 ge 2: 3e 3: 2020 2019 Cash $6,800 $3,900 Accounts receivable 42,000 28,000 Merchandise inventory 25,000 20,000 Prepaid expenses 200 100 Property, plant and equipment 130.000 120.000 Total assets $204,000 $172,000 Accounts payable $17.000 $18.000 Income taxes payable 1.000 2.000 Bonds payable (10% interest), long term 70.000 50.000 Common shares 100.000 100.000 Retained earnings 16.000 2.000 Total liabilities and owners' equity $204.000 $172.000 ge 4: se 5: Dividends on common shares totaled $9.000 in 2020. Common shares had a par value of $5 cach. All sales were on account. Calculate the inventory turnover and the Average Sale Period for 2020. If the inventory turnover was 12 times in 2019. which year had the more favourable calculations. What does the Inventory turnover and Avg Sale Period measure
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