Suppose Company A has an inventory turnover ratio of 25 and a gross margin ratio of 10%,

Question:

Suppose Company A has an inventory turnover ratio of 25 and a gross margin ratio of 10%, while Company B has an inventory turnover ratio of 3.5 and a gross margin of 50%. Which company is more likely to be a grocery store and which is more likely to be a clothing boutique? Explain why.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,...