A company's inventory turnover is one measure of its potential to convert inventory into cash. But what
Question:
Access the EDGAR database at the following Internet address:
www.sec.gov
Locate the most recent 10-K reports of Safeway, Inc., and Staples, Inc. Compute the inventory turnover of each company. Does the higher turnover computed for Safeway mean that the company manages its inventory more effectively than Staples ? Explain.
Step by Step Answer:
Company Staples Inc Safeway Inc Year 2013 2013 Sales Millions 24380 ...View the full answer
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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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