Very high inventory turnover ratio relative to industry norms could possiblyindicate the company does not carry adequate inventory, so shortages couldpotentialy hurt reverue. Select one: True False

The objective of the question is to understand the implications of a very high inventory turnover…

Answered: Very high inventory turnover ratio…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not stocking enough merchandise can result in lost sales, but carrying too much inventory increases costs and lowers margins. Both circumstances reduce profits. One measure of a reseller’s inventory management effectiveness is its stockturn rate (also called inventory turnover rate for manufacturers). The key to success in retailing is realizing a large volume of sales on as little inventory as possible while maintaining enough stock to meet customer demands. Refer to Appendix 2: Marketing by the Numbers, and determine the stockturn rate of a retailer carrying an average inventory at cost of $350,000, with a cost of goods sold of $800,000. If this company’s stockturn rate was 3.5 last year, is the stockturn rate calculated above better or worse? Explain.
Which of these would NOT contribute to a retailer's use of forward buy? O A. Low holding costs O B. Lower expected future prices from the manufacturer OC. Slow advances in product development O D. Long product shelf life O E. Volume discounts from the manufacturer
A Moving to another question will save this response. Question 10 For a retailer with inventory to sell, the acid-test ratio will be greater than the current ratio, thus providing a less stringent measure of liquidity. less than the current ratio, thus providing a more stringent measure of liquidity unimportant because it doesn't include inventory greater than the current ratio, thus providing a more stringent measure of liquidity. A Moving to another question will save this response.
Which of the following is correct about the Limitations of accounting? Select one: O a. Accounting not looks at quality aspect b. there is no bias in accounting c. Price level changes consider in accounting O d. none of the options are correct
Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not stocking enough merchandise can result in lost sales, but carrying too much inventory increases costs and lowers margins. Both circumstances reduce profits. One measure of a reseller’s inventory management effectiveness is its stockturn rate (also called inventory turnover rate for manufacturers). The key to success in retailing is realizing a large volume of sales on as little inventory as possible while maintaining enough stock to meet customer demands. Determine the stockturn rate of a retailer carrying an average inventory at cost of $850,000, with a cost of goods sold of $1,800,000.
which of the following is considered a signal of success for a manufacturing company? A) A low quick ratio B) A high inventory turnover ratio C) A high current ratio D) Low quality costs
Explain why some management accountants believe that absorption costing may provide an incentive for managers to overproduce inventory.
What is the main criticism of LIFO? A. It presents a balance sheet figure that is out-of-date. B. It artificially creates a higher income. C. It utilizes a unit cost that has no evidence of existence. D. It is often complicated to implement, especially if inventory costs change frequently.
A firm that uses LIFO accounting for inventory in times of rising investory costs will always report lower profit margins than if it used FIFO. Is this correct?
2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that averages price changes. B. Which inventory method would best meet Shepherd's goal? Enter answer here. C. What if Shepherd wanted to expense out the newer purchases of goods instead? Which inventory would best meet that need? Enter answer here.
Discuss how the inventory process supports the production planning process and the risks to the production process if inventory process control goals are not achieved. do not limit your discussion to losses from fraud.
answer these question in just two sentences. a..“If a firm sold some inventory on credit, its current ratio would probably not change much, but its quick ratio would increase.” If it is possible give reason in two sentences. b. In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio indicates that the firm has an adequate stock of inventory relative to sales and thus will not lose sales as a result of running out of stock. If it is false give reason in two sentences. c. “It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all the firms being compared have the same proportion of fixed assets to total assets.” If you are not agreed with this statement give justification in two sentences.

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

Very high inventory turnover ratio relative to industry norms could possibly indicate the company does not carry adequate inventory, so shortages could potentialy hurt reverue. Select one: True False