Beginning inventory plus net cost of purchases is:
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Merchandise available for sale
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A company's cost of goods sold was $4,000. Determine net purchases and ending inventory given goods available for sale were $11,000 and beginning inventory was $5,000.
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Net Purchases: $6,000; Ending Inventory: $7,000
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The acid-test ratio:
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Is also called the quick ratio
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The quick assets are defined as:
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Cash, short-term investments and current receivables
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Liquidity problems are likely to exist when a company's acid-test ratio:
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Is substantially lower than 1 to 1
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The acid-test ratio differs from the current ratio in that:
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Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio
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The gross margin ratio:
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Measures a merchandising firm's ability to earn a profit from the sale of inventory
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J.C. Penny had net sales of $28,496 million, its cost of goods sold was $19,092 million and its net income was $997 million. Its gross margin ratio equals:
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33%
($28,496 - $19,092)/$28,496 = 33%
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A company had: net sales of $82,000; cost of goods sold of $70,000; and other expenses of $2,000. Its gross margin ratio equals:
answer
14.63%
($82,000 - $70,000)/$82,000 = 14.63%
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