Question
You are comparing the inventory turnover ratios of two retail companies, Company A and Company B, for the fiscal year 2023. Company Cost of Goods
You are comparing the inventory turnover ratios of two retail companies, Company A and Company B, for the fiscal year 2023.
Company | Cost of Goods Sold (COGS) (in millions) | Average Inventory (in millions) |
Company A | $250 | $50 |
Company B | $180 | $30 |
Requirements:
- Calculate the inventory turnover ratio for both Company A and Company B.
- Analyze and compare the efficiency of inventory turnover between the two companies.
- Discuss potential reasons for any differences observed in the inventory turnover ratios of Company A and Company B.
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International Financial Statement Analysis CFA Institute Investment Series
Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie
1st Edition
0470287667, 978-0470287668
