Why is a high merchandise inventory turnover more desirable than a low turnover?
Question:
Step by Step Answer:
Each time the merchandise inventory turns over is sold the company gains a gross ...View the full answer
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille
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.
Students also viewed these Managerial Accounting questions
-
Why is a high risk premium an advantage for the investor? Why is a low risk premium an advantage for an investor?
-
Why is a high achiever likely to focus on goal setting, feedback, individual responsibility, and rewards?
-
Why is a high rate of inflation bad for the economy?
-
Analyze the residuals from the regression model on the patient satisfaction data from Exercise 4.49. Comment on the adequacy of the regression model. MTB> Stat> Regression > Regression Normal...
-
Korea Co, a South Korean company, is a worldwide leader in widget (a hypothetical manufactured product) production. Europe is Korea Co's single largest market. Assumptions: Korea Co*s production...
-
By rubbing object \(A\) against \(B\), if 10 electrons get transferred from \(A\) to \(B\), calculate the electric force between the two objects if separated \(10 \mathrm{~cm}\) apart.
-
What are the modifications necessary for using HRIS software applications that are designed for domestic companies in an MNE?
-
Calculate free cash flow for 2017 for Monarch Textiles, Inc., based on the financial information that follows. Assume that all current liabilities are non-interest-bearing liabilities and that no...
-
4. Using the graphical polygon method, neatly construct a graphical solution for the three force vectors. Measure the resultant in magnitude and direction. Record your answer in Table III. Attach...
-
The net income reported on the income statement for the current year was $378,000. Depreciation recorded on equipment and a building amounted to $112,500 for the year. Balances of the current asset...
-
Why are creditors interested in the ratio of stockholders equity to liabilities? Is it preferable to have a high ratio or a low ratio?
-
Describe the difference between horizontal analysis and vertical analysis with regard to comparative balance sheets.
-
Consider the data on log DPI (personal disposable income) introduced in Section 21.1 (see the books website for the actual data). Suppose you want to fit a suitable ARIMA model to these data. Outline...
-
Sancha is an accountant at Merelix, a large international firm where she works on potential acquisitions. When Merelix is preparing to acquire a company, Sancha is involved in filing the necessary...
-
The Shubert Organization, the largest owner of Broadway theatres, operates 24 theaters, including 18 on Broadway. It has brought hundreds of classic shows to Broadway over the decades, including The...
-
The governing equations and initial conditions of a dynamic system are provided. Plot the specified output(s), together with the input(s), by using the lsim command. Note that \(u(t)\) denotes the...
-
Explain and draw a graph to illustrate the effect of an increase in exports on equilibrium real GDP in the long run. Statistics Canada reported that in the second quarter of 2017 Canadian exports...
-
A random walk in an undirected connected graph moves from a vertex to one of its neighbors, where each possibility has equal probability of being chosen. (This process is the random surfer analog for...
-
1. What should and shouldnt you say when talking about Rudolph learning to press the lever? 2. Cool point for an original example of what you should and shouldnt say about contingencies creating your...
-
Use the T account for Cash below to record the portion of each of the following transactions, if any that affect cash. How do these transactions affect the companys liquidity? Jan. 2 Provided...
-
Several countries produce many of the same goods. Suppose that there are two countries, each of which produces the same two goods. Country 1 has 300 workers and Country 2 has 900 workers. The...
-
From Concept Check 2, record the May 31 semiannual payment and amortization of the discount. In Concept Check 2, On December 1, Lynch Co. issued five $2,400, 10%, 30-year bonds at 97. Record the...
-
Redo Concept Check 2 with the straight-line method, assuming that the bond sells for 106. In Concept Check 2, On December 1, Lynch Co. issued five $2,400, 10%, 30-year bonds at 97. Record the journal...
-
Redo Concept Check 2 with the straight-line method, assuming that the bond sells for 106. In Concept Check 2, On December 1, Lynch Co. issued five $2,400, 10%, 30-year bonds at 97. Record the journal...
-
1- The binomial distribution N! B(M) = (N-M)!M! describes the probability of placing M identical particles into N equivalent physical sites, with a limit of one particle/site if the probability of a...
-
Margo, a calendar year taxpayer, paid $1,580,000 for new machinery (seven-year recovery property) placed in service on August 1, 2023. Required: a. Assuming that the machinery was the only tangible...
-
*** I am seeking assistance from a tutor who is familiar with aviation, and in particular, CASA (Australia's Civil Aviation Safety Authority) and I CAO SMS (Safety Management Systems) and the...
Study smarter with the SolutionInn App