[font=ms sans serif,serif]ACC501 - Business Finance
[b][font=times new roman,serif]GDB Announcement
Discussion Question:[/font][/b]
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. [/font]
You are required to briefly discuss at least four possible negative indications with proper rationale.
Important Instructions:
[*]1. Your discussion must be based on logical facts.
[b][font=times new roman,serif]GDB Announcement
Discussion Question:[/font][/b]
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. [/font]
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.
Important Instructions:
[*]1. Your discussion must be based on logical facts.