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Use the following information for Palmer Co. to compute inventory turnover for 2017 and 2016, and its

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Use the following information for Palmer Co. to compute inventory turnover for 2017 and 2016, and its days' sales in inventory at December 31, 2017 and 2016. (Round answers to one decimal.) Comment on Palmer's efficiency in using its assets to increase sales from 2016 to 2017.

Use the following information for Palmer Co. to compute inventory
Transcribed Image Text:

2017 2016 2015 $643,825 $426,650 391,300 Cost of goods sold Ending Inventory 7,400 87.750 92,500

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2016 Inventory turnover 2016 Days Sales in Inventory 4...View the full answer


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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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