Question

Music Masters sells a unique assortment of sheet music including just about any published music ever written before 1970. Its customers are high school and college band directors and choir directors who require several copies of the same music, including music written for a variety of instruments. To buy inventory for resale, the business seeks out wholesalers with large inventories. Due to the fact that cash flow is always an important concern, the owner keeps a watchful eye on how quickly various genres of sheet music sell. To help him in this assessment, which of the following ratios would be an important part of this company's financial analysis?a. asset turnover ratio.
b. inventory turnover ratio.
c. cost of goods sold turnover ratio.
d. sales turnover ratio.

Answer 1

Answer:

Inventory turnover ratio

Explanation:

The inventory turnover ratio will tell the organization whether or not the company will generate more cash in the future this can be witnessed by consecutively using the inventory turnover ratio. The inventory turnover tell how many days the inventory takes to sell them in the market . So if the inventory turnover ratio is decreasing then it is a good news for the company because the revenue of the company is increasing due to increase in the demand of the product in the market and will generate bulk of cash surplus.