Johnson & Johnson

Financial Information:

• Beginning Inventory: $3,200,000
• Purchases: $11,000,000
• Ending Inventory: $3,800,000
• Net Sales: $16,000,000
• Operating Expenses: $4,400,000

Requirements:

1. Formulate the Cost of Goods Sold (COGS) statement.
2. Calculate the Gross Profit.
3. Compute the Inventory Turnover Ratio.
4. Draft a partial Income Statement showing Net Sales, COGS, and Gross Profit.
5. Evaluate the impact of the Inventory Turnover Ratio on Johnson & Johnson's inventory policies.