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Inventory Turnover

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  • August 2010
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Inventory turnover

Viviana Palacios
MGT521
Professor Edward Dempsey
July 26, 2010

The investment of a company’s success depends on their inventory. Inventory turnover is a ratio showing how many times a company’s inventory is sold and replaced over the period of time. The risk of Kudler Fine Foods was to make sure that their perished goods had a fast inventory turnover rate. The importance of high inventory turnover was expected to protect the brand’s integrity and vision of keeping all goods fresh. Inventory turnover is considered a key measure of management efficiency. It is a measure of how often, during a course of a year, a company sells and replaces its inventory of component parts, materials and final products. As a general rule, the higher the inventory turnover rate the better it’s for the business. For Kudler Fine Foods the perished goods used in their stores had a high inventory turnover. Management makes sure to monitor all products, to make sure that all unsalable products were pulled from the shelves. The problem affecting kundler foods was that Kathy was the only appoint person to order their inventory, in her absence the company can suffered from managing their inventory. In the vision of keeping all goods fresh, inventory accounting can play a big factor in the company’s success. Inventory is a current asset on the balance sheet, therefore inventory’s valuation can directly affect kundler foods total current asset and in general their total asset balances. A company’s inventory valuation can cause a ripple effect throughout its financial picture. Inventory management is necessary for owners like Kathy to maintain a stocking service for quick turnaround to help ensure total customer satisfaction. The fill rate of an item develops a well managed inventory list. A well maintained stock list must be kept to avoid shortages of frequently used items. One of the problems affecting Kudler Fine Foods was that of reliable suppliers, they ran...