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Refer to the Tables Above

question 119

Multiple Choice

$\begin{array} {c } \text {MARNI COMPANY }\\ \text { Balance Sheet}\\ \text { As of December 31}\\\begin{array}{lrr}\text { ASSETS }\\\text { Cash } & \$ 50,000 \\\text { Accounts receivable } & 100,000 \\\text { Inventory } & 200,000 \\\text { Net plant and equipment } & 650,000\\\text { Total assets }&\$1,000,000\\\\\text { LIABITTES AND STOCKHOLDER.S' EQUTTY }\\\text { Accounts payable } & \$ 100,000 \\\text { Accrued expenses } & 90,000 \\\text { Long-term debt } & 250,000 \\\text { Common stock } & 100,000 \\\text { Paid-in capital } & 50,000 \\\text { Retained earnings } & 410,000\\\text { Total liabilities and stockholders' equity }&\$1,000,000\end{array}\end{array}$

$\begin{array} {c } \text {MARNI COMPANY }\\ \text {Income Statement }\\ \text {For the year ended December 31 }\\\begin{array} { l } \text {Sales (all on credit) }&\$2,000,000\\ \text {Cost of goods sold }&1,750,000\\ \text { Gross profit}&\$250,000\\ \text {Sales and administrative expenses }&30,000\\ \text { Fixed lease expenses}&10,000\\ \text {Depreciation }&60,000\\ \text { Operating profit}&\$150,000\\ \text {Interest expense }&25,000\\ \text { Profit before taxes}&\$125,000\\ \text { Taxes (40 \%) }&50,000\\ \text {Net income }&\$75,000\\\end{array}\end{array}$

Refer to the tables above. The firm's inventory turnover ratio is ________.

Definitions:

Book Value

Book value is the value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus depreciation.

Net Income

The net income of a business once all costs and taxes are deducted from the total earnings.

Operating Cash Flow

The cash generated from a company's normal business operations, indicating whether a company can generate sufficient positive cash flow to maintain and grow its operations.

Earnings Before Interest And Taxes

A financial metric indicating a company's profitability before expenses from interest and taxes are deducted.