Kroger and Safeway Inc. are grocery chains in the United States. Inventory management is an important aspect
Question:
The cost of goods sold for each company were:
a. Determine the days' sales in inventory and inventory turnover for the companies. Round to the nearest day and one decimal place.
b. Which company has the faster inventory turnover?
Inventory End of Year in millions) S4,609 2,543 Beginning of Year (in millions) $4,986 2,766 Kroger Safeway Cost of Goods Sold (in millions) $50,115 28,604 Kroger Safeway
Step by Step Answer:
a Days Sales in Inventory Kroger 331 days Safeway 345 days I...View the full answer
Accounting
ISBN: 978-0176509743
Volume 1, 2nd canadian Edition
Authors: Carl warren, James Reeve, Jonathen Duchac, Sheila Elworthy,
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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