Petes Plants has the following information as of July 31, 2012: Requirements 1. Compute the rate of
Question:
Requirements
1. Compute the rate of inventory turnover for Petes Plants for the year ended July 31, 2012. Round the result to two decimal places.
2. The rate of inventory turnover for Petes Plants was 10.24 in 2011. Has the rate improved ordeteriorated?
Sales Revenue Cost of Goods Sold: $980,000 44,300 257,000 301,300 21,200 Beginning Inventory. Net Purchases Cost of Goods Available. Ending Inventory Cost of Goods Sold. Gross Proft Operating Expenses Net Incom 280,100 699,900 70,000
Step by Step Answer:
Req 1 Inventory Turnover Cost of Goods Sol...View the full answer
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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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