Lusons manager is quite concerned about its inventory turnover and would like to improve the turnover. The
Question:
Lusons financial objective is to continue with the same growth rate in sales for 2015. Its cost of goods sold is 60% of the sales.
Requirements
1. What is the inventory turnover for 2014?
2. What are the projected sales in 2015?
3. With the projected growth in sales in 2015, if Luson wants to increase inventory turnover to 5.5 times, what should the inventory be?
Sales Inventory 2013 $360,000 42,500 2014 $378,000 33,100
Step by Step Answer:
Req 1 Inventory Turnover for 2014 Cost of goods sold 165000 60 9900...View the full answer
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
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
-
Inventory turnover is calculated as cost of goods sold divided by ending inventory . 1. True 2. False
-
Inventory and cost of goods sold information for Lafleche Inc. is provided below: Required: a. Calculate the inventory turnover ratio and average number of days in inventory under the two cost...
-
The accounting records for The Skate Shed, Inc., reflected the following amounts at the end of January 2018: Prepare The Skate Shed?s multistep income statement for the fiscal year ended January 31,...
-
Boversia has a fixed exchange rate against the dollar. Taxes rise in the United States, reducing U.S. aggregate expenditure. The Federal Reserve adjusts the U.S. interest rate to keep output...
-
The management of Wengel Corporation is considering dropping product B 9 0 D . Data from the company's accounting system appear below: Sales $ 7 3 6 , 4 0 0 Variable expenses $ 3 8 2 , 6 0 0 Fixed...
-
How can social media be used to enhance report preparation and presentation?
-
Development of a new deluxe version of a particular software product is being considered by Ravi Beharas software house. The activities necessary for the completion of this project are listed in the...
-
Compute the ending balances for Prepaid Insurance, Unearned Rent Revenue, and Rent Revenue. Indicate in which financial statement those items will be reported. Prepaid Insurance Unearned Rent Revenue...
-
Write an HDL module that computes a four-input XOR function. The input is a 3:0 , and the output is y.
-
Motion Auto has the following information for the years ending December 31, 2014 and 2013: Requirements 1. Compute the rate of inventory turnover for Motion Auto for the years ended December 31, 2014...
-
Builder Bee Equipment sells hand-held engine analyzers to automotive service shops. Builder Bee Equipment started April with an inventory of 45 units that cost a total of $5,760. During the month,...
-
(x = 3500 psi, (y = 12,200 psi, Txy - 3300 psi,( = - 51 Using Mohr's circle, determine the stresses acting on an element oriented at an angle ( from the x axis. Show these stresses on a sketch of an...
-
Explain the role that group dynamics plays in successful team management and the development of a healthy people-centered workplace culture.
-
Visit Explore: Best Global Brands- Rankings assigned in the Learn section of module 1. Once at this website, filter by the United States as country of choice. Choose 1 of the brands listed....
-
What aspect of group dynamics might be important for a conflict facilitator to consider when planning their approach with individuals or a group in conflict?
-
Define the term linear mass density. Also, w Describe the effects of taking the mass of the meterstick into account when the balancing position is not near the 50-cm position. hat is implied if it is...
-
Two vectors, and lie in the xy plane. Their magnitudes are 3.18 and 5.19 units, respectively, and their directions are 291 and 44.0, respectively, as measured counterclockwise from the positive x...
-
When the government grant is in the form of land at no cost, then it should A. Not be recorded at all B. Be recorded at a fair value C. Be recorded at a nominal value
-
Complete the equations for the following equilibria and calculate Keq where the Keq expression includes [HO]. Be sure to enter Keq in proper scientific notation. (a) ammonia (acting as a base) reacts...
-
The September 1, 2009, edition of CFO.com contains an article by Marie Leone and Tim Reason entitled Dirty Secrets. You can access this article at www.cfo.com/article.cfm/ 14292477?f=singlepage....
-
The September 1, 2009, edition of CFO.com contains an article by Marie Leone and Tim Reason entitled Dirty Secrets. You can access this article at www.cfo.com/article.cfm/ 14292477?f=singlepage....
-
Hechinger Co. and Home Depot are two home improvement retailers. Compared to Hechinger, founded in the early 1900s, Home Depot is a relative newcomer. But, in recent years, while Home Depot was...
-
1 Mandatory requirement: Students are required to complete Budget on the provided Excel 2 3 4 5 5 B spreadsheet template. (For the purpose of Budget calculation in the assessment, ignore all GST...
-
A company has Rs 4 per year carrying cost on each unit of inventory, an annual usage of 50,000 units and an ordering cost of Rs 100 per order. Calculate the economic order quantity. What shall be the...
-
The company decided to make some changes to its operations based on the actual results and the variance analysis. The plan is to maintain the selling price of the product at RM100 per unit and the...
Study smarter with the SolutionInn App