E5-25 Calculating gross profit percentage and inventory turnover to evaluate a
business [10 min]
LanWan Software earned sales revenue of $65,000,000 in 2012. Cost of goods sold
was $39,000,000, and net income reached $9,000,000, the company’s highest ever.
Total current assets included inventory of $3,000,000 at December 31, 2012.
Inventory was $5,000,000 on December 31, 2011.
Requirement
1. Compute the company’s gross profit percentage and rate of inventory turnover
for 2012.
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