Use the following information for Palmer Co. to compute inventory turnover for 2013 and 2012, and its
Question:
Use the following information for Palmer Co. to compute inventory turnover for 2013 and 2012, and its days’ sales in inventory at December 31, 2013 and 2012. ( Round answers to one decimal.)
Comment on Palmer’s efficiency in using its assets to increase sales from 2012 to2013.
2013 2012 2011 Cost of goods sold .. $643825 $426.650 $391300 Ending inventory 97.400 87,750 92,50
Step by Step Answer:
2012 Inventory turnover 2012 Days Sales in Inventory 42...View the full answer
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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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