Anderson Electronics, Inc., has the following information for the years ending January 31, 2012 and 2011: Requirements
Question:
Requirements
1. Compute the rate of inventory turnover for Anderson Electronics, Inc., for the years ended January 31, 2012 and 2011. Round the result to two decimal places.
2. Compute the days-sales-in-inventory for Anderson Electronics, Inc., for the years ended January 31, 2012 and 2011.
3. What is a likely cause for the change in the rate of inventory turnover from 2011 to2012?
(In thousands) Sales Revenue Cost of Goods Sold 2012 2011 $228 $224 Beginning Invry 24 Net Purchases Cost of Goods Available176 Ending Inventory Cost of Goods Sold $ 31 147 178 24 152 Gross Profit Operating Expenses Net Income 156 72 48 S 24 154 70 49 S 21
Step by Step Answer:
Req 1 2012 Inventory Turnover Cost of Goods Sold 156000 709 ...View the full answer
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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