Calculate Gross Profit Ratio Given the Following Information: Accounts Receivable

question 135

Multiple Choice

Calculate gross profit ratio given the following information: accounts receivable = $40,000; inventory = $80,000; receivable turnover = 25 times; inventory turnover = 6 times.

• A) 50%
• B) 51%
• C) 52%
• D) 53%
• E) 54%

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Definitions:

Market Value

The present cost for purchasing or selling a product or service in a market.

Split-Off Point

The Split-Off Point is a stage in a production process where multiple products are generated from common inputs, each taking a different processing path thereafter.

Joint Costs

Costs incurred in the process of producing two or more products simultaneously, where the costs cannot be individually attributed to the products until a certain split-off point.

Market Value

The present cost at which a service or asset is available for purchase or sale.