ACC501 Business Finance GDB 1 Solution 2017

Inventory turnover ratio measures the number of times an inventory item is sold or used in during a given time period. Generally, there is no norm for this ratio and it is appreciated to be compared against industry average. A high turnover ratio shows that company is turning its inventory into cash quickly, resulting a lower risk of having obsolete inventory and vice versa.

Consider a case of Beta Corporation which is one of the leading rubber manufacturers. The company, enjoying rapid growth in the industry, is experiencing an exceptionally high inventory turnover ratio. This may signal some negative indications.

You are required to briefly discuss at least four possible negative indications with proper rationale.

Total Marks 5
Starting Date Friday, November 10, 2017
Closing Date Thursday, November 16, 2017
Status Open
Question Title GDB

 

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  • iftikhar

    where is solution of above GDB ?

  • Ali

    Please find your answer here

    High Inventory Ratio

    A high inventory turnover ratio is a little harder to interpret. It could mean
    the company has had unexpectedly strong sales — a good sign. Or it
    could mean the firm is not managing its buying as well as it might and
    is having difficulty in administering its inventory.