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Inventory turnover scenario - Rocky Corp. vs. Riley Corp. Rocky Corp. and Riley Corp. compete in...

Inventory turnover scenario - Rocky Corp. vs. Riley Corp.

Rocky Corp. and Riley Corp. compete in a local and online consumer automotive parts market. Rocky Corp. has a turnover rate of 8, while Riley Corp. has a turnover rate of 0.5.

With just this information, what would be your educated guess as to how each business is doing relative to the other business with regards to (a) return on investment, (b) on-time deliveries, and (c) net income?

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Homework Answers

Answer #1

1. Rocky Corp.

a. ROI

High Turnover Rate means the company is making high number of sales which in return increases ROI of the corporation

b. On-Time deliveries

As the Company is Making High number of sales, they will end up with insufficient stocks which in turn reduces on-time deliveries

c. Net Income

As the company is making more sales obviously the company is making high Net Income

2. Rily Corp.

a. ROI

Low Turnover Rate means the company is making Low number of sales which in return reduces ROI of the corporation

b. On-Time deliveries

As the Company is Making Low number of sales, they will end up with Huge inventory stocks which in turn helps in on-time deliveries

c. Net Income

As the company is making Low sales obviously the company is making Low Net Income

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