Allison Robards is the owner of Backstreet Books, a small eclectic style bookstore in a bustling college town. Allison prides herself in selecting hard to find books and magazines that her clientele enjoy. Recently, Allison is experiencing a cash flow shortage, and she is concerned that she may be purchasing too many copies of each title. Having recently completed a business class, you suggest to Allison that she calculate the ratio for her store, and then compare it to other stores in her industry.
A)current
B)debt to equity
C)Return on equity
D)Inventory turnover

Question

Quizplus · Accepted Answer

Allison should calculate the inventory turnover ratio, which measures how quickly a company is able to sell its inventory. This can help her determine if she is purchasing too many copies of each title and not selling them fast enough. By comparing her inventory turnover ratio to other stores in her industry, she can also see how well she is performing in relation to her competitors. The other options (current ratio, debt to equity ratio, return on equity) are important financial ratios, but they may not directly address Allison's current concern about her inventory management.

Allison Robards Is the Owner of Backstreet Books, a Small