Bell Company Has Provided the Following Figures as of December

question 38

Short Answer

Bell Company has provided the following figures as of December 31,2016: Sales,$600,000;cost of goods sold,$320,000;net income,$120,000;inventory,$64,000.Indicate whether each of the above statements pertaining to the Bell Company is true or false.
_____ a)Bell's inventory turnover is 5.0.
_____ b)Bell's average number of days to sell inventory ratio is 39.5.
_____ c)Bell could increase its inventory turnover by increasing prices.
_____ d)Bell's gross margin as a percentage of sales was 46.7%.
_____ e)A local competitor in the same line of business has an inventory turnover of 3.5.Assuming each firm has approximately the same gross margin rate,Bell Company is likely to be more profitable than the competitor.

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Definitions:

SEC

The U.S. Securities and Exchange Commission, a regulatory body tasked with protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation.

10-K Report

An annual report filed by publicly traded companies in the U.S., detailing comprehensive summaries of financial performance mandated by the SEC.

LIFO Liquidation

The process of reducing inventory that has been accounted for using the Last-In, First-Out method, potentially affecting cost of goods sold and taxes.

FIFO

FIFO, or First-In, First-Out, is an inventory valuation method where goods first bought are the first to be sold, affecting cost of goods sold and inventory valuation on the balance sheet.