At 30 June, the following information (in thousands) was available for sunglasses manufacturer, Che Eyewear Ltd: ending
Question:
At 30 June, the following information (in thousands) was available for sunglasses manufacturer, Che Eyewear Ltd: ending inventory $53 322; beginning inventory $39 300; cost of sales $129 201; sales revenue $347 901. Calculate inventory turnover and days in inventory for Che Eyewear Ltd.
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Answer Calculation of Inventory Turnover Ratio Inventory Turnover ...View the full answer
Financial Accounting Reporting Analysis And Decision Making
ISBN: 9780730313748
5th Edition
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong
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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