The following comparative cost information is available for Kingswood Limited: __Average Inventory Cost of Goods Sold FIFO

Question:

The following comparative cost information is available for Kingswood Limited:

__________Average Inventory ________Cost of Goods Sold

FIFO ............. $222,500 ........................... $750,000

Average cost ..... 227,500 ............................. 735,000

Kingswood's current assets are $450,000, exclusive of inventory. Its current liabilities are $350,000.

Instructions

(a) Calculate Kingswood's inventory turnover ratio assuming (1) FIFO and (2) average cost is used to determine the cost of the ending inventory.

(b) Calculate Kingswood's current ratio assuming (1) FIFO and (2) average cost is used to determine the cost of the ending inventory.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...