Problem: Using the following information, calculate inventory turnover ratio, the average days in inventory and the gross profit ratio for Howard Company for the year ended December 31, 2011 (Rounded to two decimal places.) Explain each concept and show the relevant formula along with the solution.
Sales $225,000
Cost of goods sold $175,000
Ending Inventory, December 31, 2011 $15,275
Ending Inventory December 31, 2010 $18,750
Net Income $36,500