Just a Buck Discounts Stores is assessing its levels of inventory for 2010 and 2011 and has
Question:
Just a Buck Discounts Stores is assessing its levels of inventory for 2010 and 2011 and has gathered the following data:
Compute the inventory turnover and days inventory on hand for 2010 and 2011 and comment on theresults.
2011 2010 2009 Ending invenory 6,00 S81,000 S69,000 Cost of goods sold 480,000 450,000
Step by Step Answer:
Just a Buck Discount Stores inventory is increasing much fa...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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