Motion Auto has the following information for the years ending December 31, 2014 and 2013: Requirements 1.
Question:
Motion Auto has the following information for the years ending December 31, 2014 and 2013:
Requirements
1. Compute the rate of inventory turnover for Motion Auto for the years ended December 31, 2014 and 2013. Round the result to two decimal places.
2. What is a likely cause for the change in the rate of inventory turnover from 2013 to 2014?€ƒ
2013 (In thousands) Sales Revenue Cost of Goods Sold 2014 $242 $239 Beginning Inventory 22 $ 38 144 182 152 Net Purchases Cost of Goods Available 174 Ending Inventory Cost of Goods Sold 13 161 81 Gross Profit Operating Expenses Net Income 160 79 54 25 26
Step by Step Answer:
Req 1 Numbers are in thousands Req 2 Motion Autos cost of goods sold remained relatively co...View the full answer
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
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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