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Your appliance manufacturing company recently implemented a just-in-time inventory system for all parts used in the manufacturing

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Your appliance manufacturing company recently implemented a just-in-time inventory system for all parts used in the manufacturing process. How might you expect this move to affect the company’s inventory turnover rate, current ratio, and quick ratio?

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Since the goal of JIT systems is to have only the right amount of ...View the full answer


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Business in Action

Business in Action

ISBN: 978-0133773996

7th edition

Authors: Courtland Bovee, John Thill

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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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