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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

a. Why is it advantageous to have a high inventory turnover?
b. Is it possible for the inventory turnover to be too high? Discuss.
c.Is it possible to have a high inventor)' turnover and a high days' sales in inventory? Discuss.

To determine

(a)

Inventory turnover:

It is a ratio showing how many times a company sold and replaced inventory during a given period. It tells how fast how fast the company sells inventory.

To discuss:

The advantages of high inventory turnover.

Explanation

High inventory turnover gives the business better position in terms of negotiation with suppliers.

High inventory turnover is also helpful in reducing storage cost. When inventory holding period is less company can save on storage ...

To determine

(b)

Inventory turnover:

It is a ratio showing how many times a company sold and replaced inventory during a given period. It tells how fast how fast the company sells inventory.

To discuss:

Whether inventory ratio can be too high.

To determine

(c)

Inventory turnover:

It is a ratio showing how many times a company sold and replaced inventory during a given period. It tells how fast how fast the company sells inventory.

To discuss:

If inventory turnover and day sales in inventory to be high.

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