Chapter 11, Problem 11.14MA

Summary Introduction

Case summary:

To make sales, goods are needed by the retailers. The biggest asset of the retailer is the inventory. As there is not enough stock of goods that may result in low sales and carrying large inventory, which increases the costs and decreases the margin. These two situations reduce the profit.

The efficiency of the reseller’s inventory management is stock-turn rate (inventory turnover rate for producers). The key to succeed in the retailing business is realizing a heavy quantity of sales on a small inventory as probable while maintaining enough stock to meet the demands of the customer.

Introduction:

Stock turnover is also known as inventory turnover; it is the rate or ratio that shows the number of times the company has sold and replaced stocks in a particular period.

To determine: Whether the calculated stock turn rate is better or worse.