1. Kappa Retail

Scenario: Inventory Management and Turnover Analysis

Data: Kappa Retail manages inventory using a perpetual inventory system and reported the following financial data for the year 2023:

• Beginning Inventory: $100,000
• Purchases: $500,000
• Ending Inventory: $150,000
• Cost of Goods Sold (COGS): $450,000

Requirements: Calculate Kappa Retail's inventory turnover ratio for the year. Analyze the significance of the inventory turnover ratio in assessing inventory management efficiency. Discuss the impact of inventory turnover on Kappa Retail's financial performance and liquidity. Evaluate the effectiveness of Kappa Retail's inventory management strategies based on the turnover ratio. Recommend actions for Kappa Retail to optimize inventory turnover and improve financial performance.