Which of the following statements isnotcorrect?

Multiple Choice

• The gross profit percentage is calculated by dividing the gross profit for the year by the net sales for the year.
• The average inventory is calculated by adding the beginning inventory to the ending inventory and dividing the sum by 2.
• A current ratio of 3.5 to 1 means that a firm has $3.50 in current liabilities for every $1 of current assets.
• Working capital is the difference between total current assets and total current liabilities.