Refer to the note related to inventories in the CVS annual report in the Supplement to Chapter
Question:
Refer to the note related to inventories in the CVS annual report in the Supplement to Chapter 16 to answer the following questions: What inventory method(s) does CVS use? Do you think many of the company’s inventories are valued at market? Why or why not? Few companies use the retail method, so why do you think CVS uses it? Compute and compare the inventory turnover and days’ inventory on hand for CVS for 2011 and 2010. Ending inventories in 2009 were $10,343 million. (Round to one decimal place.)
Step by Step Answer:
CVS uses the lowerofFIFOcostormarket rule as determined by the retail inventory method It is unlikel...View the full answer
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
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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