The following selected financial data pertain to four unidentified companies: The above financial information pertains to the
Question:
The above financial information pertains to the following companies:
a. Travel agency
b. Hotel
c. Meat processing company
d. Drug company
Required:
Match each company with its financial information.
COMPANIES Balance Sheet Data (component percentage Cash Accounts receivable Inventory Property and equipment 7.3% 28.2 21.6 32.1 21.6% 39.7 0.6 18.0 6.1% 3.2 1.8 74.6 11.3% 22.9 27.5 25.1 Income Statement Data (component percentage Cost of goods sold Profit before taxes 84.7% 1.7 0.0% 3.2 0.0% 2.4 56.6% 6.9 Selected Ratios Current ratio Inventory turnover ratio 1.5 27.4 1.2 N/AN/A 1.9 3.3 0.6 N/A-Not applicable
Step by Step Answer:
1 COMPANY 1 Meat processing company a Key indicators High inventory turnover low ...View the full answer
Financial Accounting
ISBN: 978-1259222139
9th edition
Authors: Robert Libby, Patricia Libby, Frank Hodge
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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