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To help you understand and compare the performance of two companies in the same industry. Find the

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To help you understand and compare the performance of two companies in the same industry.

Find the Columbia Sportswear Company annual report located in Appendix A, and go to the financial statements starting on page 663. Now access the 2016 annual report for Under Armour, Inc., online. For instructions on how to access the report, see the Industry Analysis in Chapter 1. The company’s financial statements start on page 57.


Requirement

Calculate the inventory turnover for both companies for 2016. Who has the highest inventory turnover? Is that good or bad? Is it better to have a high inventory turnover or a low inventory turnover?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Inventory turnover is the ratio of cost of goods sold to average inventory It is calculated by divid...View the full answer


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Financial Accounting

Financial Accounting

ISBN: 978-0134727790

5th edition

Authors: Robert Kemp, Jeffrey Waybright

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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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