Question 6:

• Proficient:
  • Identify and describe the ratio that can be used to analyze a company's inventory.
  • What does the ratio measure? What are the components of the ratio? How is the ratio computed?
  • How does a company know if the results of the calculation are helping or hurting the company's financial health?
• Distinguished:
  • Given the following information, calculate the inventory turnover for Lincoln Company, a large grocery store chain. Evaluate the trend results.
    • 2014: Cost of goods sold$1,043,000; Beginning inventory$283,000; Ending inventory$264,000.
    • 2013: Cost of goods sold$820,000; Beginning inventory$311,000; Ending inventory$283,000.