Imation, a global technology company, reported the following selected items as part of its 2008 annual report
Question:
Imation, a global technology company, reported the following selected items as part of its 2008 annual report (dollars in millions):
REQUIRED:Compute the following ratios:1. Current ratio2. Quick ratio3. Receivable turnover (time and days)4. Interest coverage5. Return on assets6. Inventory turnover (times and days)7. Return onequity
2008 2007 S 97 S 140 507 Cash Accounts receivable Inventory Current assets 378 363 366 976 504 945 1,119 Current liabilities 631 1.054 Shareholders' equity S2,155 1,805 Sales Cost of gouds sold Interest expense Net loss before taxes (35) (33) Net loss
Step by Step Answer:
1 Current Ratio Current Assets Current Liabilities 976 504 194 2 Quick Ratio Cas...View the full answer
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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