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Anvil Metal Works (AMW) had a quick ratio of 1.1, a current ratio of 2.5, an inventory

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Anvil Metal Works (AMW) had a quick ratio of 1.1, a current ratio of 2.5, an inventory turnover of 4 times, total current assets of $810,000, and cash and marketable securities of $120,000. What were AMW's annual sales and its DSO? Assume a 365-day year.
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1 2 3 4 5 Current assets Current liabilities Current liabilities 324000 Current assets Inventor...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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