Fred Koontz owns and operates a sporting goods store Following
Fred Koontz owns and operates a sporting goods store. Following are selected financial data regarding Koontz’s business over the past three years.
Required:
(a) Compute the inventory turnover ratio and age of inventory for Koontz’s store for each year listed. On January 1, 2007, the store’s inventory was $60,000.
(b) Given the data provided and the ratios you computed in part (1), evaluate Koontz’s management of inventory over this three-year period.
(c) Koontz is concerned by the slow growth in his company’s net income in recent years. Given the data provided, identify factors that may be adversely affecting the business’s profitability.
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