How is inventory turnover calculated and what does it measure?
Question:
Step by Step Answer:
Inventory turnover measures how rapidly merchandise inventory is sold ...View the full answer
Horngrens Financial and Managerial Accounting
ISBN: 978-0133255584
4th Edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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.
Students also viewed these Accounting questions
-
How is the current ratio calculated and what does it measure? How does the quick ratio differ from the current ratio?
-
How is the acid-test ratio calculated and what does it signify?
-
How is the times-interest-earned ratio calculated and what does it evaluate?
-
Explain the difference between impregnation and infiltration. Give some applications for each?
-
The reaction H2(g) + I2(g) 2HI(g) may occur by the following mechanism: What rate law is predicted by the mechanism? 12 21 (fast, equilibrium) (slow)
-
Suppose the S&P 500 is at 900, and it will pay a dividend of $30 at the end of the year. Suppose also that the interest rate is 2%. If a one-year European put option has a negative time value, what...
-
Describe the various legal risks for nurses.
-
Review each of the following independent sets of conditions. For each condition, calculate the (1) Sample rate of deviation, and use AICPA sample evaluation tables to identify the (2) Upper limit...
-
Consolidation Eliminating Entries, First Year Packer Corporation buys 85 percent of the voting stock of Slattery Inc. on January 1, 2023, at an acquisition cost of $10,000,000. The fair value of the...
-
What specific HR function scan you identify as being problematical in this company? Again, please give specific answers.
-
When does an inventory error cancel out and why?
-
Mountain Cycles started August with 12 bicycles that cost $ 42 each. On August 16, Mountain bought 40 bicycles at $ 68 each. On August 31, Mountain sold 36 bicycles for $ 84. Required 1. Prepare...
-
Lustig, Stathopoulos, and Verdelhan (2016) investigate the profitability of carry-trade strategies with long-maturity bonds. One such strategy involves going long (short) longmaturity government...
-
True Or False Some courts require a showing of more than mere negligence before they will find an insurer acted in bad faith.
-
A reservation of rights is a. found in the Fourteenth Amendment to the U.S. Constitution. b. the act of an insured in a first-party claim. c. the act of an insurer in initially providing a defense to...
-
How are appeals often governed in workers compensation laws?
-
Damages for bad faith go beyond the ________ damages of contract law.
-
True Or False Britain was the European country where the underpinnings of workers compensation as we now know it began to take shape.
-
Nitrosyl bromide, NOBr, dissociates readily at room temperature. Some NOBr is placed in a flask at 25C and allowed to dissociate. The total pressure at equilibrium is 190 mm Hg and the compound is...
-
Avatar Financials, Inc., located on Madison Avenue, New York City, is a company that provides financial advice to individuals and small- to mid-sized businesses. Its primary operations are in wealth...
-
Generate a set of functional tests for a moderate-size program. Evaluate your test coverage in one of two ways: have someone else independently identify bugs and see how many of those bugs your tests...
-
The financial statements of Valerie's Natural Foods include the following items: Compute the following ratios for the current year: a. Current ratio b. Cash ratio c. Acid-test ratio d. Inventory...
-
Big Beautiful Photo Shop has asked you to determine whether the company's ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you...
-
Verifine Corp. reported the following on its comparative income statement: Prepare a horizontal analysis of revenues and gross profit-both in dollar amounts and in percentages-for 2019 and 2018. (In...
-
F. Pierce Products Inc. is financing a new manufacturing facility with the issue in March of $20,000,000 of 20-year bonds with semiannual interest payments. It is now October, and if Pierce were to...
-
Watch the video, Critical Theory, Social Justice and Christianity: Are they Compatible? https://www.youtube.com/watch?v=qnmJX5hEenY&t=2894s&ab_channel=NOBTSApologetics Review the articleThe...
-
Describe an example of a data privacy law or any obstacle to international legislation that pertains to data privacy.
Study smarter with the SolutionInn App