Three companies that compete in the footwear market are Foot Locker, Finish Line, and DSW. The following
Question:
Three companies that compete in the footwear market are Foot Locker, Finish Line, and DSW. The following table shows inventory levels and cost of goods sold for each company for the 2017, 2016, and 2015 fiscal years. Calculate the inventory turnover ratio for each company in each year, and summarize your findings. All values are in $ millions.
Foot Locker Cost of goods sold Inventory Finish Line Cost of goods sold Inventory DSW Cost of goods sold Inventory 2017 $4,299 1,307 $1,158 331 $1,729 500 2016 $4,130 1,285 $ 1,111 348 $1,652 484 2015 $4,010 1,250 $1,057 343 $1,548 451
Step by Step Answer:
All three firms have similar inventory turnover ratios ranging from 341x to 346x ...View the full answer
Fundamentals Of Investing
ISBN: 9780135175217
14th Edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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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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