Question
Inventory Management Metrics Large retailers like The Home Depot and Wal-Mart typically use gross margin ratio (gross margin sales), inventory turnover (sometimes referred to as
Inventory Management Metrics Large retailers like The Home Depot and Wal-Mart typically use gross margin ratio (gross margin sales), inventory turnover (sometimes referred to as inventory turns), and gross margin return on investment (GMROI) to evaluate how well inventory has been managed. The goal is to maximize profits while minimizing the investment in inventory. Below are data for four scenarios, a base scenario (# 1) followed by three modifications (#s 2, 3, & 4) to the base scenario.
Sales | $10,000 | $20,000 | $13,000 | $10,000 |
Cost of goods sold | 6,000 | 12,000 | 6,000 | $6,000 |
Gross profit | $4,000 | $8,000 | $7,000 | $4,000 |
Average inventory | $6,000 | $6,000 | $6,000 | $5,000 |
For each scenario calculate the gross margin percent, the inventory turnover, and GMROI.
Round your answers to one decimal place. (Example for % answers-- 99.9%)
Gross margin % | Answer | % | Answer | % | Answer | % | Answer | % |
Inventory Turnover | Answer | Answer | Answer | Answer | ||||
GMROI | Answer | % | Answer | % | Answer | % | Answer | % |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started