Calculate the GMROI and inventory turnover given annual sales of $20,000, average inventory (at cost) of $4,000
Question:
Calculate the GMROI and inventory turnover given annual sales of $20,000, average inventory (at cost) of $4,000 and a gross margin of 45 percent.
Step by Step Answer:
GMROI Gross margin x Salestostock r...View the full answer
Retailing Management
ISBN: 978-1259573088
10th edition
Authors: Michael Levy, Barton Weitz, Dhruv Grewal
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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