Lemony Company made sales of $ 32 comma 200 million during 2018. Cost of goods sold for the year totaled $ 12 comma 880 million. At the end of 2017, Lemony's inventory stood at $ 1 comma 200 million, and Lemony ended 2018 with inventory of $ 1 comma 600 million. Compute Lemony's gross profit percentage and rate of inventory turnover for 2018. Begin by computing Lemony's gross profit percentage for 2018. (Round your answer to the nearest tenth of a percent, X.X%.) Lemony's gross profit percentage for 2018 is %.

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andromache andromache · Answer 1 · 2019-09-25T12:33:11+02:00

Answer:

Gross profit is 60%

Inventory turnover is 4.6 times

Explanation:

The formula to compute the gross profit percentage is shown below:

= (Gross profit ÷ sales) × 100

where,

Gross profit = Sales - the cost of good sold

= $32,200 million ÷ $12,880 million

= $19,320 million

And, the sales is $32,200 million

Now put these values to the above formula

So, the percentage would equal to

= ($19,320 million) ÷ ($32,200 million) × 100

= 60%

The formula to compute the inventory turnover is shown below:

= (Cost of goods sold) ÷ average inventory

where,

Average inventory = (Beginning inventory + ending inventory) ÷ 2

= ($1,200 million + $1,600 million ) ÷ 2

= $900 million

And, the cost of good sold is $12,880 million

Now put these values to the above formula

So, the turnover would equal to

= $12,880 million ÷ $2,800 million

= 4.6 times