Question

low corporation, a home improvement store chain, reported the following summarized figures.
view the income statement. view the balance sheets.
low corporations has 100,000 common shares outstanding during 2025.
requirement 1. compute the inventory turnover, days sales in inventory, and gross profit percentage for low corporation for 2025.
compute the inventory turnover (round your answer to two decimal places, x.xx.)
the inventory turnover = = times
balance sheets
low corporation
balance sheet
may 31, 2025 and 2024
assets
2025 2024
cash $ 2,700,000 $ 1,600,000
short - term investments 18,000,000 10,000,000
accounts receivable 7,000,000 5,700,000
merchandise inventory 6,800,000 7,200,000
other current assets 8,000,000 2,500,000
total current assets 54,500,000 27,300,000
all other assets 30,000,000 28,000,000
total assets $ 84,500,000 $ 55,300,000
liabilities
2025 2024
total current liabilities $ 26,000,000 $ 12,000,000
long - term liabilities 12,800,000 12,700,000
total liabilities 38,800,000 25,500,000
stockholders equity
common stock 9,000,000 9,000,000
retained earnings 30,000,000 20,800,000
total equity 45,800,000 29,800,000
total liabilities and equity $ 84,500,000 $ 55,300,000
income statement
low corporation
income statement
years ended may 31, 2025 and 2024
2025 2024
net sales revenue $ 51,000,000 $ 41,800,000
cost of goods sold 25,800,000 29,300,000
interest expense 700,000 140,000
all other expenses 6,700,000 7,800,000
net income $ 23,000,000 $ 4,560,000

Explanation:

Step1: Recall the formula for inventory turnover

The formula for inventory turnover is $\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Merchandise Inventory}}$.

First, we need to find the average merchandise inventory. The merchandise inventory for 2025 is $6,800,000$ and for 2024 is $7,200,000$. The average is calculated as $\frac{\text{Inventory}_{2025} + \text{Inventory}_{2024}}{2}$.

Step2: Calculate average merchandise inventory

$\text{Average Merchandise Inventory} = \frac{6,800,000 + 7,200,000}{2} = \frac{14,000,000}{2} = 7,000,000$.

Step3: Find Cost of Goods Sold for 2025

From the income statement, the Cost of Goods Sold (COGS) for 2025 is $25,800,000$.

Step4: Calculate inventory turnover

Using the formula, $\text{Inventory Turnover} = \frac{25,800,000}{7,000,000} \approx 3.69$ (rounded to two decimal places).

Answer:

The inventory turnover is $\frac{25800000}{7000000} \approx 3.69$ times. So the answer is $\boxed{3.69}$.