For each ratio listed, identify whether the change in ratio value from 2012 to 2013 is usually
Question:
Ratio Ratio 2013 9% 47% 2012 8% 42% 2013 2012 . Profit margin 2. Debt ratio 3, Gross margin 34% 46% 7, Inventory turnover 4. Acid-test ratio 1.00 15 8. Dividend yield 5. Accounts receivable turnover 5.5 6.7 $1.25 $.10 3.6 3.4 2.0% 1.2% 6, Basic earnings per share
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Ratio 2013 2012 Change 1 Profit Margin Ratio 9 8 Favorable 2 Debt R...View the full answer
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. 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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