From the following information for Russo Merchandising Co., calculate inventory turnover for 2021 and 2020 and days?
Question:
From the following information for Russo Merchandising Co., calculate inventory turnover for 2021 and 2020 and days? sales in inventory at December 31, 2021 and 2020. Round answers to one decimal place.
Comment on Russo?s efficiency in using its assets to support increasing sales from 2020 to 2021.
2019 2020 2021 Cost of goods sold.. Merchandise inventory (December 31). $643,825 $426,650 86,750 $391,300 91,500 96,400
Step by Step Answer:
It appears that Russo has lower levels of inventory on hand because it is turning it over more qu...View the full answer
Fundamental Accounting Principles Volume I
ISBN: 978-1260305821
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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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