Question
Freiman Corporation's most recent balance sheet and income statement appear below: Balance Sheet December 31, Year 2 and Year 1 (in thousands of dollars) Assets
Freiman Corporation's most recent balance sheet and income statement appear below:
Balance Sheet December 31, Year 2 and Year 1 (in thousands of dollars) | ||
Assets | Year 2 | Year 1 |
Current assets: |
|
|
Cash | $160 | $120 |
Accounts receivable | 220 | 240 |
Inventory | 120 | 130 |
Prepaid expenses | 40 | 40 |
Total current assets | 540 | 530 |
Plant and equipment, net | 700 | 700 |
Total assets | $1,240 | $1,230 |
Liabilities and Stockholders Equity |
|
|
Current liabilities: |
|
|
Accounts payable | $130 | $150 |
Accrued liabilities | 90 | 90 |
Notes payable, short term | 60 | 70 |
Total current liabilities | 280 | 310 |
Bonds payable | 280 | 290 |
Total liabilities | 560 | 600 |
Stockholders equity: |
|
|
Common stock, $2 par value | 100 | 100 |
Additional paid-in capital-common stock | 200 | 200 |
Retained earnings | 380 | 330 |
Total stockholders equity | 680 | 630 |
Total liabilities & stockholders equity | $1,240 | $1,230 |
Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars) | |
Sales (all on account) | $1,310 |
Cost of goods sold | 780 |
Gross margin | 530 |
Selling and administrative expense | 359 |
Net operating income | 171 |
Interest expense | 35 |
Net income before taxes | 136 |
Income taxes (30%) | 41 |
Net income | $95 |
The inventory turnover for Year 2 is closest to:
0.92
6.50
1.08
6.24
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