Accounting Analysis I: The Role of Accounting as an Information System | Online Course Support

Problem 2: Evaluating Efficiency of Asset Management Use the following information for questions 4-6. The 2016 Income Statement of Illini Company reported net sales of $8 million, cost of goods sold of $4.8 million, and net income of $800,000. The following table shows the company’s comparative Balance Sheets for 2016 and 2015:

 
6
 
 

Inventory turnover ratio = $4,800,000($900,000+700,000)/2

The company turns its inventory over 6 times per year compared to the industry average of 5 times per year. Thus the company is better than the overall industry average.

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