Calculate GMROI and inventory turnover given: Annual sales $12,000 Average inventory (at cost) $4,000 Gross
Question:
Annual sales ……………………………… $12,000
Average inventory (at cost) ……………… $4,000
Gross margin ……………………………. 35%
Step by Step Answer:
1 GMROI GMROI Gross Margin Average inventory at cost 35 x ...View the full answer
Retailing Management
ISBN: 978-0070893207
4th Canadian Edition
Authors: Michael Levy, Barton Weitz, Dea Watson
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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