Suppose that you are a commercial lender at a financial institution. One of the accounts that you

Question:

Suppose that you are a commercial lender at a financial institution. One of the accounts that you manage is a local company that processes apples into juices and sauces. You have just received the company’s most recent financial statements and have observed that the inventory turnover ratio has decreased from 13.2 to 9.7.

Required

Explain whether or not you would be concerned about this change and identify the nature of any concerns. Indicate how you would explain your position to your manager.

Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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