Costco Inventory Turnover Ratios

MODERN CEMENT
Ratio Analysis
Activity Analysis

|ST Activity Ratios |2002 |2003 |2004 |2005 |2006 |
|Inventory Turnover Ratio |0 |1.11 |0.097 |0.085 |0.696 |
|Average No. Days Inventory In Stock |0 |328.9 |3742.72 |4301.69 |524.56 |

Interpretations:
Short Term Activity ratios calculate the operational efficiency regarding the utilization of short term assets
Inventory Turnover Ratio: The ratio tells about how many times Inventory turnover is made or complete in a given year. Higher the ratio is better that mean the inventory is turnover very quickly. Inventory Turnover Ratio 1.11 in 2003 indicates that company can sell total finished goods (inventory) 1.11 times every year. Increase in this ratio indicates the efficiency in managing inventory, which is not present in this company as we can the declining rate over the past years. This also indicates that the reserve of inventory and inventory holding cost is high for this company.
From the table we can see that the ratios are too high which also indicates Modern Cement is inefficient in managing its inventory.

|LT Activity Ratios |2002 |2003 |2004 |2005 |2006 |
|Total Asset Turnover Ratio |0.018 |0.007 |0.011 |0.006 |0.071