Following Are the Financial Statements for Starman Corporation for the Year

question 27

Multiple Choice

Following are the financial statements for Starman Corporation for the year ended December 31, 20xx. Assume that all balance sheet amounts represent both average and ending figures.
$\begin{array}{|l|}\hline \text { Starman Corporation } \\\hline \text { Balance Sheet } \\\hline \text { December } 31,20 x x \\\hline \text { Assets }\\\hline\end{array}$

$\begin{array}{|l|l|}\hline \text { Cash } & \$ 20,000 \\\hline \text { Marketable securities } & 30,000 \\\hline \text { Accounts receivable } & 50,000 \\\hline \text { Inventory } & 100,000 \\\hline \text { Long-term receivables } & 35,000 \\\hline \text { Property, plant, and equipment } & 65,000 \\\hline \text { Total assets } & \$ 300,000 \\\hline\end{array}$

$\begin{array}{l}\begin{array}{|l|l|}\hline \text { Liabilities and Stockholders' Equity }\\\hline \text { Current liabilities } & \$ 100,000 \\\hline \text { Long-term liabilities } & 60,000 \\\hline \text { Stockholders' equity } & 140,000 \\\hline \text { Total liabilities and stockholders' equity } & \$ 300,000 \\\hline\end{array}\end{array}$

$\begin{array}{|l|}\hline \text { Starman Corporation } \\\hline \text { Income Statement } \\\hline \text { For the Year Ended December } 31,20 \mathrm{xx} \\\hline\end{array}$

$\begin{array}{|l|r|}\hline \text { Net sales } & \$ 400,000 \\\hline \text { Cost of goods sold } & 240,000 \\\hline \text { Gross margin } & \$ 160,000 \\\hline \text { Operating expenses } & 40,000 \\\hline \text { Income before income taxes } & \$ 120,000 \\\hline \text { Income taxes expense } & 30,000 \\\hline \text { Net income } & \$ 90,000 \\\hline\end{array}$
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What is the inventory turnover for this corporation? Round your answer to one decimal place.

• A) 1.2 times
• B) 1.6 times
• C) 2.4 times
• D) 4.0 times

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Definitions:

NPV

Net Present Value, a method used in investing to calculate the difference between the present value of cash inflows and outflows over a period of time.

Required Rate Of Return

The minimum return that an investor is willing to accept for owning a company's stock, given its risk.

Cash Flows

The total amount of money being transferred into and out of a business, particularly concerning liquidity.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.