Freiman Corporation's Most Recent Balance Sheet and Income Statement Appear

question 24

Multiple Choice

Freiman Corporation's most recent balance sheet and income statement appear below:
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
$\begin{array}{lr}\text { Sales (all on account) }&\$ 1,310 \\\text {Cost of goods sold. }&780 \\\text {Gross margin. }&530 \\\text {Selling and administrative expense }&359 \\\text {Net operating income }&171 \\\text {Interest expense }& 35 \\\text {Net income before taxes }&136 \\\text { income taxes (30\%) }& 41 \\\text {Net income }& 95\end{array}$
-The inventory turnover for Year 2 is closest to:

• A) 0.92
• B) 6.50
• C) 1.08
• D) 6.24

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Definitions:

Caveat Emptor

A legal principle meaning "let the buyer beware," implying that the buyer assumes the risk regarding quality or condition of the item purchased.

Ladino

A language, also known as Judeo-Spanish, spoken by descendants of Sephardic Jews who were expelled from Spain in 1492.

Central America

A geographical region in the Americas comprised of seven countries located between Mexico and South America.

Eastern Europe

A geographical and cultural region of Europe, traditionally comprising the countries east of Germany and west of the Ural Mountains.