Comparative figures for Best Buy and RadioShack follow. Required 1. Compute inventory turnover for each company for
Question:
Comparative figures for Best Buy and RadioShack follow.
Required
1. Compute inventory turnover for each company for the most recent two years shown.
2. Compute days’ sales in inventory for each company for the three years shown.
3. Comment on and interpret your findings from parts 1 and 2. Assume an industry average for inventory turnover of 6.3.
Best Buy RadioShack Current One Year Two Years Current One Year Two Years (S millions) Year Prier Peier Year Prior Prior Inventory .. Cost of sales 4,7534708 4,028 636.3 $ 705.4 $ 752.1 2,648.1 34,017 30,477 27,165 2,3018 2,225.9
Step by Step Answer:
millions 1 2 3 For all years examined here Best Buy manages its inv...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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