Grady Company's inventory turnover was 8.2 in 2X13.After analyzing several similar,competing companies,Grady Company found that the average inventory turnover for those companies was 11.8.What should Grady Company consider doing?

Question

Quizplus · Accepted Answer

Grady Company should consider decreasing inventory by increasing sales to improve their inventory turnover ratio. Compared to their competitors, their inventory turnover is lower, meaning they are holding onto inventory for a longer period of time than necessary. By decreasing inventory and increasing sales, they can improve their inventory turnover ratio and potentially increase their profitability. Purchasing more inventory or changing the calculation method for inventory turnover would not necessarily improve their ratio. Decreasing sales would also not be a viable solution for improving inventory turnover.

Grady Company's Inventory Turnover Was 8