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Inventory Management Efficiency Your role as the lead financial consultant for Luxe Retail Group involves analyzing the company's financial operations. Recent reviews have pointed to

Inventory Management Efficiency
Your role as the lead financial consultant for Luxe Retail Group involves analyzing the company's financial operations. Recent reviews have pointed to a drop in profits despite an increase in overall sales. You have engaged a financial analyst to delve deeper into the issue. Their assessment has revealed a critical concern with inventory management, specifically the inventory turnover rate.
Review the following financial data and consider the implications for Luxe Retail Group's inventory management:
Year
Net Sales
Inventory
Gross Profit
2017
$1,440,000
$352,000
$392,000
2016
$1,040,000
$86,400
$408,000
2015
$960,000
$65,600
$417,600
As profits are declining with increased sales, a detailed analysis suggests that the inventory turnover rate is insufficient. The analyst advises stricter inventory management and discontinuing partnerships with suppliers consistently late in restocking. How do you interpret these recommendations, and what actions would you implement?

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