Danaher Corporation manufactures a variety of products, including electronic measurement instruments and network communications products, water quality
Question:
Required:
How well did Danaher manage its inventories over the three-yearperiod?
Danaher Corporation ($ in thousonds) Sales Cost of goods sold Average inventory Selected performance measures: 2009 2010 2011 $11,184,938 5,904,718 1,067,663 $13,202,602 6,575,812 1,109,084 S16,090,540 7,913,876 1,473,488 Gross profit (%) Inventory turnover ratio 47.2% 5.53 50.2% 5.93 50.8% 5.37
Step by Step Answer:
The data reveal some improvement in inventory management at Danaher over the three years but Year 2 ...View the full answer
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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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