Durkin & Davis, a partnership, had these inventory data: Durkin & Davis need to know the companys
Question:
Durkin & Davis need to know the companys gross profit percentage and rate of inventory turnover for 2010 under
1. FIFO
2. LIFO
Which method makes the business look better on?
3. Gross profit percentage?
4. Inventoryturnover?
2009 2010 Ending inventory at: FIFO Cost LIFO Cost .. $17,000 21,000 15,000 23,000 Cost of goods sold at: FIFO Cost.. LIFO Cost. $ 85,700 92,500 141,000 Sales revenue..
Step by Step Answer:
Req 1 and 2 1 2 FIFO LIFO Gross profit percentage 141000 85700 141000 9250...View the full answer
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
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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