Use a spreadsheet and the following excerpts from Hileah Companys financial information to build a template that
Question:
Use a spreadsheet and the following excerpts from Hileah Company’s financial information to build a template that automatically calculates (A) inventory turnover and (B) number of days’ sales in inventory, for the year 2018.
Cash Accounts receivable Merchandise inventory Total assets Accounts payable Common stock Retained earnings Total liabilities and equity Additional information Cost of goods sold 12/31/18 12/31/17 $10,000 $14,000 22,000 17,000 15,900 14,200 47,900 45,200 4,500 10,000 33,400 47,900 177,000 5,500 10,000 29,700 45,200
Step by Step Answer:
Spreadsheet Inventory turnover COGS Average Inventory Inventory Turnover For ...View the full answer
Principles Of Accounting Volume 1 Financial Accounting
ISBN: 9781593995942
1st Edition
Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, OpenStax
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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