The following information for Whittier Technologies was taken from the companys financial statements (amounts in thousands): Instructions:
Question:
Instructions:
1. Compute the inventory turnover and the number of days sales in inventory for the years 20092011. Use average inventory in your calculations.
2. Evaluate Whittiers inventory turnovertrend.
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...
2011 2010 2009 2008 Sales Cost of goods sold Inventory Accounts receivable Accounts payable. Net Income $60,000 $51,000 $39,000 $30,000 22.200 1,800 4,700 2.400 4,100 41,200 3,000 5,600 2,500 7.260 34,900 2.700 5,200 2,100 6,540 26,500 2,200 5,100 1,900 4.950
Step by Step Answer:
1 2011 2010 2009 Inventory x beginning 2700 2200 1800 Inventory x end 3000 270...View the full answer
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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