Selected Financial Statement Data from Western Colorado Stores Is Shown

question 123

Essay

Selected financial statement data from Western Colorado Stores is shown below.
Required:
1. Compute the gross profit ratio for 2009.
2. Compute the inventory turnover ratio for 2009.
$\begin{array}{lrr}&2009&2008\\\text { Net sales } & \$ 625,000 & \$ 690,000 \\\text { Cost of goods sold } & 500,000 & 490,000 \\\text { Operating expenses } & 105,000 & 85,000 \\\text { Inventory } & 90,000 & 70,000\end{array}$

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Definitions:

Deductibility

The eligibility of an expense to be subtracted from gross income to reduce taxable income.

Pension Plans

Financial arrangements designed to provide individuals with an income during retirement, funded by either the employer, the employee, or both.

Income Tax Purposes

The specific calculations and methods used to determine taxable income and tax liabilities according to the regulations set by tax authorities.

Pension Plan

A pension scheme in which an employer is obliged to contribute to a fund allocated for an employee's future benefit.