In its 2006 annual report, Deere and Company reported inventory of $1,957.3 million on October 31, 2006,
Question:
In its 2006 annual report, Deere and Company reported inventory of $1,957.3 million on October 31, 2006, and $2,134.9 million on October 31, 2005, cost of goods sold of $15,362 million for the year ended October 31, 2006, and net sales of $19,884 million. Compute Deere and Company’s inventory turnover and the average days to sell inventory for the fiscal year 2006.
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Inventory turnover A...View the full answer
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
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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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