Which of the following alternatives represents the correct inventory turnover rate of Njengabo Limited for the year 2022?

a. 4.34
b. 4.00
c. 4.40
d. 2.17
e. 2.15

Njengabo Limited is a company in the coal export business. The following information was extracted from the financial records of this listed company as of 28 February 2022, the end of the financial year.

Additional information:
1. Purchases for the year amounted to R310,000, and 51% thereof were on credit.
2. Ratios reported for the year ended 28 February 2021:
- Trade receivables collection period: 66.9 days
- Trade payables payment period: 64.9 days
- Inventory turnover rate: 6 times
3. Only 40% of the total sales were cash sales.
4. The gross profit percentage is 35% on sales.

Which of the following alternatives represents the correct trade receivables collection period of Njengabo Limited for the year 2022?

The correct inventory turnover rate for Njengabo Limited for the year 2022 is 4.34 (option a). Inventory refers to the goods, materials, or products held by a company for sale, production, or use in its normal course of business.

To calculate the inventory turnover rate, we use the formula:

Inventory Turnover Rate = Cost of Goods Sold / Average Inventory

The necessary information is not provided in the question to directly calculate the inventory turnover rate. Additional details such as the cost of goods sold and average inventory are required.

Regarding the trade receivables collection period for Njengabo Limited in 2022, the question does not provide the necessary information to determine the correct trade receivables collection period. The trade receivables collection period would depend on factors such as the credit terms, sales mix, and the specific payment behavior of customers.

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