Lisa Inc.\'s balance sheet appears below: Lisa Inc. Statement of Financial Posit

Question

Lisa Inc.'s balance sheet appears below:

Lisa Inc.
Statement of Financial Position
December 31
(in thousands)
Year 2 Year 1
Cash $ 29 $ 24
Marketable securities 17 10
Accounts receivable (net) 42 28
Inventories 55 50
Prepaid expenses 15 15
Total current assets 158 127
Land 154 125
Building (net) 79 86
Equipment (net) 129 345
Total long-term assets 362 556
Total assets $520 $477

Accounts payable $ 51 $ 32
Accrued interest 19 19
Short-term notes payable 25 15
Total current liabilities 95 66
Long-term notes payable 14 14
Bonds payable 19 19
Total long-term liabilities 33 33
Total liabilities 128 99
Preferred stock $(100 par value, 5%) 100 100
Common Stock $(10 par value) 150 150
Additional paid-in capital--common stock 77 77
Retained earnings 65 51
Total stockholders’ equity 392 378
Total liabilities & equity $520 $477

The company's sales for the year were $310 thousand, its cost of goods sold was $216 thousand, and its net income was $37 thousand. All sales were on credit. Preferred dividends for the year were $5 thousand.
Lisa Inc.'s inventory turnover for Year 2 was closest to:
A 3.9
B 5.9
C 4.1
D 5.4

Explanation / Answer

Inventory turnover = Cost of goods sold / average inventory $216 / [(55+50)/2] = 4.11 C is the correct answer.

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