Partial information follows for a Canadian manufacturing company: Instructions (a) Enter the missing amounts where indicated for
Question:
Instructions
(a) Enter the missing amounts where indicated for years 8, 9, and 10 in the above schedule.
(b) Comment on the profitability and inventory management trends, and suggest possible reasons for these results.
Year 8 $344,759 263,979 Year 10 Year 9 Year 7 Sales Cost of goods sold Gross margin Ending inventory Gross profit percentage Inventory turnover Days sales in inventory $401,244 95,086 87,957 34,511 34,750 36,750 23.5% 8.19 times 44.57 days
Step by Step Answer:
a Missing values Year 10 Year 09 Year 08 Year 07 Sales 401244 374307 344759 ...View the full answer
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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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