From last year to this year, Colossal Companys current ratio increased and its inventory turnover decreased. Does
Question:
From last year to this year, Colossal Company’s current ratio increased and its inventory turnover decreased. Does this imply a higher, or lower, risk of obsolete inventory?
Step by Step Answer:
The decrease in inventory turnover an...View the full answer
Fundamentals of Financial Accounting
ISBN: 978-1259864230
6th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby
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.
Students also viewed these Business questions
-
From last year to this year, Berry Barn reported that its Net Sales increased from $ 300,000 to $ 400,000 and its Gross Profit increased from $ 90,000 to $ 130,000. Was the Gross Profit increase...
-
Reliable Brakes manufactures brake pads and other automotive components. The firm's CEO is very pleased that aggressive cost cutting appears to be paying off as the firm's cost per unit has decreased...
-
Paterson Company,* a U.S.-based company, manufactures and sells electronic components worldwide. Virtually all its manufacturing takes place in the United States. The company has marketing divisions...
-
If we define the median of a sequence as a number so that exactly as many elements come before it in the sequence as come after it, fix the program in 4.6.3 so that it always prints out a median....
-
The Linear Combination Lemma says which equations can be gotten from Gaussian reduction of a given linear system. (1) Produce an equation not implied by this system. 3x + 4y = 8 2x + y = 3 (2) Can...
-
On August 1, 2024, Trico Technologies, an aeronautic electronics company, borrows $21 million cash to expand operations. The loan is made by FirstBanc Corp. under a short-term line of credit...
-
Currently, there are 4227 Walmart stores in the United States and another 3210 stores outside of the United States. a. Are the numbers of Walmart stores discrete or continuous? b. What is the level...
-
A cross-flow heat exchanger consists of a bundle of 32 tubes in a 0.6-m 2 duct. Hot water at 150C and a mean velocity of 0.5 m/s enters the tubes having inner and outer diameters of 10.2 and 12.5 mm....
-
What are similarities and differences you found in reviewing charts of various counselors at your site? In review of your site's documentation expectations, what stood out for you the most? How are...
-
1. Given the information provided by the financial statements, what would you tell Mary Abrahams? (As part of your answer, calculate the firm's cash flows.) 2. How would you describe the cash flow...
-
1. Which of the two basic reporting approaches for the cash flows from operating activities did Lowes use? Is this the same as what The Home Depot used? 2. What amount of cash did Lowes receive from...
-
What are the two essential characteristics of useful financial information? What other characteristics enhance the usefulness of financial information?
-
Assume the same facts as PB10-6, but now assume that Methodical uses the simplified effective interest bond amortization method, as shown in supplement 10C. Required: 1. Prepare a bond amortization...
-
What makes a reinforcer effective? a. DISC= Deprivation, Intermittent, Socially appropriate, Controlled b. DISC=Deprivation, Immediacy, Size/Magnitude, Contingency/response effort c. DISC =...
-
What legislative act increased the FAA's workload exponentially, and why?
-
2. Two charges, A and B, are separated as shown. a) b) d) A Force on A -2Q Which pair of vectors correctly describes the relative magnitude and the direction of the forces that these charges exert on...
-
What makes customized employment different from most vocational services for people with disabilities? It improves job seekers' skills to make them competitive. It focuses on jobs in sheltered...
-
The present value of the cash inflows calculated: Year 1: 2 million MDL / (1+10%)^1 = 1.818 million USD Year 2: 2 million MDL / (1+10%)^2 = 1.653 million USD Year 3: 2 million MDL / (1+10%)^3 = 1.503...
-
The file P18_12.txt contains yearly data for the number of licensed drivers (those under 18, those over85, and total) by gender and state. Import this data into Excel and save it as an Excel (.xlsx)...
-
The Pletcher Transportation Company uses a responsibility reporting system to measure the performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is measured using...
-
Determining Financial Statement Effects of Transactions Involving Notes Payable Many businesses borrow money during periods of increased business activity to finance inventory and accounts...
-
At April 30, 2013, H. J. Heinz reported the following amounts (in millions) in its financial statements: Required: 1. Compute the debt-to-assets ratio and times interest earned ratio (to two decimal...
-
Refer to the information in E10-9 and assume Grocery Corporation uses the straight-line method to amortize the bond premium. Info E10-9 Required: 1. Prepare the journal entry to record the bond...
-
In October 20X5, Pollock Company exchanged a used packaging machine having a book value of $240,000 for a new machine and paid a cash difference of $30,000. The market value of the used packaging...
-
Project managers should track the details of their projects to be transparent and manage risks as they arise. What is another benefit of tracking in project management?
-
During 2020, Nike disposed of a machine that had been acquired on January 1, 2014 for a purchase price of $20 million. The machine was being depreciated using the straight-line method, a $4 million...
Study smarter with the SolutionInn App