Answer:
Scott Walker company has an inventory turnover of 2.33 times and 39.13% while The industrial averages of inventory turnover and gross profit percentage is 5 times and 50% respectively.
Explanation:
Inventory turnover ratio is ratio of cost of goods sold to average inventory.
Cost of goods sold = $280,000
Beginning inventory = $100,000
Ending inventory = $140,000
Average inventory = [(100,000 + 140,000) / 2]
= $120,000
Inventory Turnover Ratio = Cost of goods sold / Average inventory
= 280,000 / 120,000
= 2.33 times
Scott Walker company's inventory turnover ratio is 2.33 times.
Gross profit margin is ratio of gross profit to net sales.
Gross profit = Net sales – cost of goods sold
= 460,000 – 280,000
= $180,000
Gross profit percentage = Gross profit / net sales
= 180,000 / 460,000
= 0.3913 or 39.13%
Scott Walker company's gross profit percentage is 39.13%.
Therefore, Scott Walker company has an inventory turnover of 2.33 times and 39.13% while The industrial averages of inventory turnover and gross profit percentage is 5 times and 50% respectively.