Use the following information relating to Shana Company to calculate the inventory turnover ratio and the number
Question:
Use the following information relating to Shana Company to calculate the inventory turnover ratio and the number of days’ sales in inventory ratio.
Year 2021 Year 2022 Year 2023 Year 2024 Sales $22,000 28,000 33,000 35,000 Cost of Goods Sold $16,500 21,000 24,750 26,250 Average Inventory $2,400 3,000 3,500 4,000
Step by Step Answer:
In order to calculate the inventory turnover ratio and the number of days sa...View the full answer
Principles Of Accounting Volume 1 Financial Accounting
ISBN: 9781593995942
1st Edition
Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper, OpenStax
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
-
A 5/16 -in steel bar is welded to a vertical support as shown in the figure. What is the shear stress in the throat of the welds if the force F is 32 kip? br> in 2 in
-
Compute Altoona Companys (a) inventory turnover ratio and (b) number of days sales in inventory ratio, using the following information. Cost of goods sold Beginning inventory Ending inventory...
-
Compute Westtown Companys (A) inventory turnover ratio and (B) number of days sales in inventory ratio, using the following information. Cost of goods sold Beginning inventory Ending inventory...
-
An investment project has annual cash inflows of $3,200, $4,100, $5,300, and $4,500, and a discount rate of 14 percent. What is the discounted payback period for these cash flows if the initial cost...
-
Why might leasing a new Porsche be a good investment for an aspiring Hollywood film producer, even though he can't easily afford the monthly payments?
-
On January 1, 2015, Lizzy's Lemonade issues 5%, 20-year bonds with a face amount of $100,000 for $88,443, priced to yield 6%. Interest is paid semiannually. What amount of interest expense will be...
-
How do you define structural modeling in an object-oriented approach?
-
Nick Company had the following transactions during April. 1. Sold merchandise on account. 2. Purchased merchandise on account. 3. Collected cash from a sale to Athletic Company. 4. Recorded accrued...
-
10% If the Bank of Canada purchases government securities worth $100, and assume that r (desired or required reserve ratio), in the above formula, is 10%, What will be the total expansion in money...
-
Mullet, Shark and Starfish operate a business which conducts deep sea fishing trips. Their partnership agreement states that all profits and losses are to be shared in the ratio of 3:2:1 after...
-
Tanke Company reported net income on the year-end financial statements of $850,200. However, errors in inventory were discovered after the reports were issued. If inventory was overstated by $21,000,...
-
Assuming a companys year-end inventory were understated by $16,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts....
-
The interest rates in the UK and the United States are, respectively, \(4 \%\) and \(6 \%\) per annum compounded continuously. The spot price of the UK pound is \(\$ 1.6\). The forward price for a UK...
-
The following output presents the results of a hypothesis test for a population mean \(\mu\). a. Can \(H_{0}\) be rejected at the \(5 \%\) level? How can you tell? b. Someone asks you whether the...
-
An automotive engineer subjects a large number of brake pads to a stress test and measures the wear on each. The values obtained are \(\bar{X}=7.4 \mathrm{~mm}\) and \(\sigma_{\bar{X}}=0.2...
-
Consider the following data set: a. Construct a normal probability plot for these data. Do the data appear to come from an approximately normal distribution? b. Transform the data by taking the...
-
Erin computes a \(95 \%\) confidence interval for \(\mu\) and obtains (94.6, 98.3). Jamal performs a test of the hypotheses \(H_{0}: \mu=100\) versus \(H_{1}: \mu eq 100\) and obtains a \(P\)-value...
-
A \(99 \%\) confidence interval for \(\mu\) is \((5.1,5.8)\). Someone wants to use the data from which this confidence interval was constructed to test \(H_{0}: \mu=6\) versus \(H_{1}: \mu eq 6\)....
-
Year Peak Entertainment acquires its l00-percent-owned subsidiary Saddlestone Inc. on January 1, 2013. In preparing to consolidate Peak and Saddlestone at December 31, 2013, you assemble the...
-
What are the 5 Cs of marketing channel structure?
-
At the beginning of 2017, Silver Corporation has a $95,000 capital loss carryforward from 2016. During 2017, the corporation sells land, held for four years, and realizes an $80,000 gain. Silver has...
-
Sylvester owns and operates an unincorporated pizza business that delivers pizza to customers. Three years ago, he acquired an automobile for $30,000 to provide delivery service. Recently, Sylvester...
-
On March 10, 2014, Elizabeth, a college professor, purchased a house for $300,000. She did not move into the house until August 8, 2014. On August 1, 2015, she accepted a position as a visiting...
-
GDZ, a Norwegian firm, has systematic risk of 0.95 when measured against the MSCI World Market Index. Its systematic risk is 1.15 when measured against the Norwegian stock index. The expected returns...
-
What is the critical variable in Altman's Z-score for iABC Ltd? What is underlying this variable? Justify your answer.
-
A stock is selling for $61.55 per share. Put options with an exercise price of $53.70 are priced at $3.81. What is the time value of this option?
Study smarter with the SolutionInn App