Using the data for the two years, calculate the inventory turnover for each year. The beginning inventory
Question:
Canna, Inc. Comparative Income Statement Years Ended December 31, 2019 and 2018 Amounts 2018 2019 1635750 9 6750 1539000 106 6 300 4 72700 2 15000 2 10000 Sales Less Sales Returns and Allowances Net Sales Cost of Goods Sold Gross Profit on Sales Selling Expenses General Expenses Total Expenses 150095o 82950 14 18000 992600 | 4 25400 205000 190000 395000 30400 45 60 425000 4 7700 7 155 4 0545 Net Income before Income Taxes Income Tax Expense Net Income after Income Taxes 25840
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Inventory turnover Co...View the full answer
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina
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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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