Dartmouth Games reported the following information for a three-year period:
Calculate inventory turnover, days sales in inventory, and gross profit margin.
| 2021 | 2020 | 2019 | ||||
| Ending inventory | $ 20,000 | $ 30,000 | $ 34,000 | |||
| Sales | 125,000 | 128,000 | 115,000 | |||
| Cost of goods sold | 50,000 | 51,200 | 46,000 | |||
| Profit | 30,000 | 42,000 | 40,000 |
Instructions
a. Calculate the inventory turnover, days sales in inventory, and gross profit margin for 2021 and 2020.
b. Based on this information, does the company’s liquidity appear to be improving or deteriorating?