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Inventory Ratio Calculations McMahan, LTD. provided the following data for 2008 and 2009: Inventory December 31, 2007 $178,000 December 31, 2008 187,000 December 31, 2009
Inventory Ratio Calculations McMahan, LTD. provided the following data for 2008 and 2009: Inventory December 31, 2007 $178,000 December 31, 2008 187,000 December 31, 2009 194,000 Cost of goods sold 2008 $545,000 2009 590,000 Gross margin 2008 $253,000 2009 288,000 Do not round until your final answers. Round all calculations to two decimal places. (a) Calculate the inventory turnover ratio for 2008 and 2009. 2008 times 2009 times (b) Calculate the gross margin return on inventory investment for 2008 and 2009. 2008 2009 (c) Which of the following is an indication that McMahan has become more lean in 2009 than in 2008? For every dollar invested in average inventory it produced more gross margin in 2008 than in 2009. Olt had a higher inventory turnover in 2009 than in 2008. Olt had a higher gross margin in 2009 than 2008. Olnventory turnover was above the established standard of 3.0 for lean companies. All of the above are signs of having a lean operation
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