Refer to the Following Selected Financial Information from McCormik, LLC

question 200

Multiple Choice

Refer to the following selected financial information from McCormik, LLC. Compute the company's inventory turnover for Year 2. $$\begin{array} { | l | r | r | } \hline & { \text { Year 2 } } & { \text { Year 1 } } \\\hline \text { Cash } & \$ 37,500 & 3 6 , 8 5 0 \\\hline \text { Short-term investments } & 90,000 & 90,000 \\\hline \text { Accounts receivable, net } & 85,500 & 86,250 \\\hline \text { Merchandise inventory } & 121,000 & 117,000 \\\hline \text { Prepaid expenses } & 12,100 & 13,500 \\\hline \text { Plant assets } & 388,000 & 392,000 \\\hline \text { Accounts payable } & 113,400 & 111.750 \\\hline \text { Net sales } & 711,000 & 706,000 \\\hline \text { Cost of goods sold } & 390,000 & 385,500 \\\hline\end{array}$$

• A) 3.86.
• B) 5.78.
• C) 3.28.
• D) 4.33.
• E) 4.72.

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Definitions:

Observation Period

The specific time frame over which data is collected or observations are made, often used in statistical analyses and studies.

High Variance

Refers to a wide range of outcomes or values in a set of data, indicating a high level of volatility or risk.

M2 Measure

A broad measure of a country's money supply that includes cash, checking deposits, and easily convertible near money.

Modigliani and Miller

Two economists who introduced groundbreaking theories on the irrelevance of capital structure for a company's value and the dividend policy irrelevance in an ideal market.