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Chapter 9: Question 19Q (page 442)

Of what significance is inventory turnover to a retail store?

Short Answer

Expert verified

Inventory turnover indicates the number of times the company's average inventory is converted into sales in the given period.

Step by step solution

01

Definition of inventories

Inventory turnover is the financial ratio, which is measured as the ratio of the cost of goods sold by the business and the average inventory of the business. Average inventory is determined by adding the beginning and ending inventory and dividing them by two.

02

Inventory turnover formula

InventoryTurnover=CostofGoodssoldAverageInventory

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Most popular questions from this chapter

Sedato Company follows the practice of pricing its inventory at LCNRV, on an individual-item basis. Item No. Quantity Cost per Unit Estimated Selling Price Cost to Complete and Sell 1320 1,200 \(3.20 \)4.50 $1.60 1333 900 2.70 3.40 1.00 1426 800 4.50 5.00 1.40 1437 1,000 3.60 3.20 1.35 1510 700 2.25 3.25 1.40 1522 500 3.00 3.90 0.80 1573 3,000 1.80 2.50 1.20 1626 1,000 4.70 6.00 1.50 Instructions From the information above, determine the amount of Sedato Company inventory

Deere and Company reported inventory in its balance sheet as follows. Inventories $1,999,100,000 What additional disclosures might be necessary to present the inventory fairly?

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Question:Distinguish between gross profit as a percentage of cost and gross profit as a percentage of sales price. Convert the following gross profit percentages based on cost togross profit percentages based on sales price: 25% and 331 /3%. Convert the following gross profit percentages based on sales price to gross profit percentages based on cost: 331 /3% and 60%.
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