The inventory turnover ratio s of Green Grocer, Peaches and Cream (a clothing boutique), and Exotic Cars
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Required:
a. How is the inventory turnover ratio calculated? What information is provided by this ratio?
b. Is the company with the highest turnover ratio being run the most efficiently? Explain.
c. Evaluate the turnover ratios for the three companies. Are the differences in ratios consistent with what you would expect? Explain.
d. What other ratios would you examine in assessing the companies' operating efficiency?
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,...
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a The inventory turnover ratio is calculated by dividing cost of goods sold by the average inventory balance The ratio gives information on how long c...View the full answer
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Related Book For 
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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