a. Calculate the merchandise inventory turnover for 2014 for each company (round to two decimal places). b.
Question:
b. Can you compare these companies? Explain.
c. Review the turnover for Freshcut Flowers Inc. Does this result appear to be logical? Explain why or whynot.
(millions of $) Computer Inc. Furniture Retallers Freshcut Flowers Inc. Furniture Unlimited 2014 2013 2014 2013 2014 2013 2014 2013 Cost of goods sold Merchandise inventory $1,350 960 $2,940 51,920 $2,160 $2,430 $2,190 $1,740 150 120 105 60 15 45 120
Step by Step Answer:
a Computer Inc Furniture Retailers Freshcut Flowers Inc Furniture Unlimited ...View the full answer
Fundamental Accounting Principles Volume II
ISBN: 978-1259066511
14th Canadian Edition
Authors: Larson Kermit, Jensen Tilly
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.
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