For each of the following ratios, indicate whether it is a liquidity, efficiency, solvency, or profitability ratio
Question:
For each of the following ratios, indicate whether it is a liquidity, efficiency, solvency, or profitability ratio by checking off the appropriate column:
Ratio Liquidity Efficiency Solvency Profitability Return on common shareholders' equity Inventory turnover Current ratio Debt/equity ratio Acid-test ratio Accounts receivable turnover Return on sales
Step by Step Answer:
Return on common shareholders equity Profitability r...View the full answer
Horngrens Accounting
ISBN: 9780135359785
11th Canadian Edition Volume 2
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura, Carol A. Meissner, Jo Ann Johnston, Peter R. Norwood
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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