Question

Mayree is the owner of Spines Books, a small eclectic-style bookstore in a bustling college town. Mayree prides herself in selecting hard-to-find books and magazines that her clientele enjoy. Recently, Mayree 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 Mayree that she calculate the ______________ ratio for her store, and then compare it to other stores in her industry.

Answer 1

Answer:

Inventory turnover

Explanation:

Inventory turnover is the ratio which states how many times the company has sold as well as replaced the inventory during the stated period. The company could divide the days in the year through the formula of inventory turnover in order to compute the days it need to sell the inventory.

So, in the case, if she compute the inventory turnover ratio for the store and then compare with other stores. And higher inventory turnover ratio states the greater amount of efficiency in the business operations. The objective is to maximize the use of the cash and minimize the inventories.