For Apples current annual report, assume it reports the following for raw materials. Required 1. Compute Apples
Question:
For Apple’s current annual report, assume it reports the following for raw materials.
Required
1. Compute Apple’s raw materials inventory turnover ratio for the most recent two years.
2. Is the current year change in Apple’s raw materials inventory turnover ratio favorable or unfavorable?
$ illions Current Year 1 Year Ago 2 Years Ago Raw materials inventory, ending ... $ 2,100 $ 1,900 $ 2,500 Raw materials used...... 72,000 74,800 79,200
Step by Step Answer:
1 2 Favorable Explanation Apples raw materials inventory turnover is higher in the current y...View the full answer
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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