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?

Question at position $1$

$1$

$5$ points

Question at position $1$

What does an inventory turnover rate of $6\mathrm{.}57$ indicate?

What does an inventory turnover rate of $6\mathrm{.}57$ indicate?

Luxe Retail Group sells its inventory $6\mathrm{.}57$ times a year.

Luxe Retail Group replenishes its inventory every $6\mathrm{.}57$ months.

It takes $6\mathrm{.}57$ days for Luxe Retail Group to sell its inventory.

Luxe Retail Group's inventory is $6\mathrm{.}57$ times larger than its sales.

Question at position $2$

$2$

$2$ points

Question at position $2$

The decreasing inventory turnover rate from $2016$ to $2017$ suggests that Luxe Retail Group is improving in managing its inventory.

The decreasing inventory turnover rate from $2016$ to $2017$ suggests that Luxe Retail Group is improving in managing its inventory.

True

False