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maria [59]
3 years ago
12

Truman Co. sells a large number of common household items, while Stapleton sells a small number of expensive items. The two comp

anies report the same dollar amount for ending inventory and gross profit for the year. Which of the following is most likely true?
A Truman has a higher inventory turnover ratio, and Stapleton has a lower gross profit ratio.

B Stapleton has a higher inventory turnover ratio and higher gross profit ratio.

C Truman has a higher inventory turnover ratio and higher gross profit ratio.

D Truman has a higher inventory turnover ratio, and Stapleton has a higher gross profit ratio.
Business
1 answer:
slava [35]3 years ago
4 0

Answer:

Truman has a higher inventory turnover ratio and Stapleton has a higher gross profit ratio ( D )

Explanation:

Truman sell a large number of common household items ( assuming 100 unit )

while Stapleton sells a small number of expensive items ( assuming 20 units )

lets assume : Truman sells at $5 per unit and Stapleton sells at $50 per unit

with the above assumptions

Truman gross profit ratio = $5 * 100 units = $500

Stapleton gross profit ratio = $50 * 20 units = $1000

from the above assumptions you can deduce that the gross profit made by Stapleton is higher although he sells a smaller amount of goods while Truman has a higher Turnover because of its higher number of sold units

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