Chapter 14
Turning Up Clues in Turnover and Assets
IN THIS CHAPTER
Comparing inventory valuation systems
Counting inventory turnover
Measuring fixed assets turnover
Assessing total asset turnover
Testing how well a company manages its assets is a critical step in measuring how effectively it uses its resources. Inventory is the most important asset for generating cash for any company that sells a product.
Many factors directly impact the cost of selling a product, including producing the product, purchasing the products or materials not produced in-house, storing the product until it's sold, and shipping the product to the customer or store where it's sold. And if a company doesn't sell its product fast enough, the product may become obsolete or damaged before it's sold.
In this chapter, I review the measures you can use to gauge how well a company manages its assets, especially its inventory, and how quickly the company sells the inventory.
Exploring Inventory Valuation Methods
A company must know the value of its inventory to complete its balance sheet. In addition, the company ...
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