For each ratio listed, identify whether the change in ratio value from 2014 to 2015 is usually
Question:
Ratio 2015 2014 Ratio 2015 2014 5.5 I. Profit margin 2. Debt ratio . 3. Gross margin 4. Acid-test ratio... 9% 47% 34% 1.00 8% 42% 46% .15 5. Accounts receivable turnover... 6. Basic earnings per share 7. Inventory turnover 6.7 $1.25 $.I0 3.6 2.0% 1.2%
Step by Step Answer:
Ratio 2015 2014 Change 1 Profit Margin Ratio 9 8 Favorable 2 Debt R...View the full answer
Fundamental Accounting Principles
ISBN: 978-0077862275
22nd edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta
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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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