f. Inventory turnover is cost of sales divided by average inventory. Cost of sales...
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Accounting
f Inventory turnover is cost of sales divided by average inventory.
Cost of sales
Average Inventories, net
Inventory turnover ratio
times
times
g Inventory holding period daysinventory turnover ratio:
: days. : days.
The inventory turnover ratio has decreased from to and the inventory holding period increased suggesting that Callaway manage its inventories less efficiently in than it did in Callawa experienced an increase in average inventory by approximately i while cost of sales declined in the same period by approximatel Callaway could have experienced a decline in demand near the er of the year that caused yearend inventories to increase. alternative explanation could be that Callaway is deliberate stocking more inventory of finished goods and raw material anticipation of increased future sales. Callaway's sales during increased from after a number of years of declines suggest that the second explanation may be plausible.
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