Baker Mfg Inc. wishes to compare its inventory turnover to those of industry leaders, who have turnover
Question:
Baker Mfg Inc. wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory.
a. What is Bakers inventory turnover?
b. How does Bakers performance compare to the industry leaders?
Arrow Distributing Corp. Net revenue Cost of sales Inventory Total assets $16,500 $13.500 1,000 8,600 Baker Mfg. Ine. Net revenue Cost of sales Inventory Total assets $27.500 $21,500 1,250 $16,600
Step by Step Answer:
a Computation of the Bakers Inventory Turnover Given information ...View the full answer
Operations Management Sustainability and Supply Chain Management
ISBN: 978-0134130422
12th edition
Authors: Jay Heizer, Barry Render, Chuck Munson
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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