Comparative figures for Polaris and Arctic Cat follow. Required 1. Compute inventory turnover for each company for
Question:
Comparative figures for Polaris and Arctic Cat follow.
Required
1. Compute inventory turnover for each company for the most recent two years shown.
2. Compute days’ sales in inventory for each company for the three years shown.
3. Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of5.
Polaris Arctic Cat Current OneYear Two Years Current One Year Two Years ($ thousands) Year Prior Prior Prior ntory....298,042 $ 235,927 179315 61.478 $ 81,36 120,804 Cost of sales96.366 1460,926 1172668 363,142 367,492 480,441
Step by Step Answer:
1 2 3 For all years examined here Polaris manages its inventory more efficientl...View the full answer
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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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