The commercial (sales) of both firms is as follows: Company A Company B Sales 4,000,000 4,000,000 Cost of goods sold 2,000,000 1,200,000 Gross profit 2,000,000 2,800,000 Average inventory 200,000 300,000 Inventory turnover 10 4 2. The company B has the lowest inventory turnover but it is more efficient in generating higher gross profit. Explain how this can happen. 3. Poor decision-making can have bad consequences on the financial activity of companies. Discuss this in details and give concrete examples.

The commercial (sales) of both firms is as follows: Company A Company B Sales 4,000,000 4,000,000 Cost of goods sold 2,000,000 1,200,000 Gross profit 2,000,000 2,800,000 Average inventory 200,000 300,000 Inventory turnover 10 4 2. The company B has the lowest inventory turnover but it is more efficient in generating higher gross profit. Explain how this can happen. 3. Poor decision-making can have bad consequences on the financial activity of companies. Discuss this in details and give concrete examples.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 87PSB

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