Reference no: EM132990921
Polk Software Inc. has a quick ratio of 2.00x, $32,850 in cash, $18,250 in accounts receivable, some inventory, total current assets of $73,000, and total current liabilities of $25,550. The company reported annual sales of $100,000 in the most recent annual report. Additionally, the company's cost of goods sold is 75% of sales.
Problem 1: Over the past year, how often did Polk Software Inc. sell and replace its inventory?
Option 1: 2.86x
Option 2: 8.01x
Option 3: 3.76x
Option 4: 3.42x
Problem 2: The inventory turnover ratio across companies in the software industry is 3.762x. Based on this information, which of the following statements is true for Polk Software Inc.?
Option 1: Polk Software Inc. is holding more inventory per dollar of sales compared with the industry average.
Option 2: Polk Software Inc. is holding less inventory per dollar of sales compared with the industry average.