What are some of the issues a company might face if they do not have enough...
What are some of the issues a company might face if they do not have enough inventory on hand and what ratio analysis might help management analyze inventory issues?
Homework Answers
If enough inventory is not on hand,
1. the business risk would arise i.e., the company might not be able to procure raw materials on time
2. company might be exposed to fluctuation in prices of raw materials
3. company might not be able to fulfill customer orders
Ratios such as turnover ratios-Inventory turnover ratio would help analyse inventory issues
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