Analysts maintain that two of the most important ratios are inventory turnover and accounts receivable turnover.
1. You are analyzing XYZ Company, a tractor manufacturer. You notice that inventory turnover this year is significantly lower than prior years. Provide two explanations that would be consistent with this observation.
Explain whether these would be a good sign or if these would be a concern to you and what the effect might be on next period's financial results.
2. You are analyzing XYZ Company, a tractor manufacturer. You notice that accounts receivable turnover this year is significantly lower than prior years. Provide two explanations that would be consistent with this observation.
Explain whether these would be a good sign of if these would be of concern to you and what the effect might be on next period's financial results.